The PESO could bounce against the dollar this week following the release of soft US consumer inflation data, which will allow the US Federal Reserve to continue its easing cycle.
The local unit closed at P58.625 per dollar on Friday, 1.5 centavos lower than Thursday's P58.61, data from the Bankers Association of the Philippines showed. This was a fresh nearly nine-month low for the peso.
Week to week, the peso has declined by 46.5 centavos from its closing level of P58.16 on October 17.
The local unit remained mostly sideways against the dollar on Friday in cautious trading ahead of the release of the highly anticipated US Consumer Price Index (CPI) report, a trader said.
Rizal Commercial Banking Corp. chief economist Michael L. The dollar also generally strengthened as gold prices continued to rise, Ricafort said in a Viber message.
In the Asian session on Friday, the US dollar was steady as investors awaited delayed inflation data that showed US consumer prices rose less than expected in September, putting the Federal Reserve on track to cut interest rates again this week, Reuters reported.
US President Donald J. Trade war concerns were also back on the agenda after Trump said all trade negotiations with Canada had been ended after the province of Ontario ran a fraudulent ad in which former President Ronald Reagan spoke negatively about tariffs.
US CPI rose 0.3% last month and 3% in the 12 months to September. Economists polled by Reuters had expected the CPI to rise 0.4% for the month and 3.1% year on year.
The CPI report was published despite an economic data blackout due to the government shutdown. The figure, used by the Social Security Administration to calculate cost-of-living adjustments for millions of retirees and other benefit recipients, was initially due Oct. 15.
After the data was released, the US dollar index was down 0.021% at 98.934, having fallen 0.2% earlier.
The Fed is expected to cut rates twice this year, including a quarter-percentage point cut for the October 28-29 meeting, according to LSEG calculations using rate futures.
Since rate changes are already factored into asset prices, markets are likely to be more sensitive to any forward-looking language from Fed Chairman Jerome H. Powell, with the central bank expected to cut rates further at its next meeting in December.
Perhaps driving the crisis over the Fed's decision-making ability is the lack of data provided by the government since the shutdown began on Oct. 1, including a delay in releasing jobs at a time of growing concerns about the health of the labor market.
For this week, traders said the peso could bounce back as a softer-than-expected US consumer inflation report reinforces the dovish Fed outlook.
The trader sees the peso rising between P58.20 and P58.60 per dollar this week, while Mr. Ricafort sees it ranging between P58.35 to P58.85. , AMC Sy with reuters
