Peso slips on PCE data, weak sentiment

The peso slipped against the dollar on Monday as a key US inflation measure showed that President Donald J. Trump’s tariffs are beginning to affect prices.

The local unit closed at PHP 57.16 per dollar, inching down by three centavos from its PHP 57.13 finish on Friday, Bankers Association of the Philippines data showed.

The peso opened the session at PHP 57.122 against the dollar, which was already its intraday best. Meanwhile, it weakened to as low as PHP 57.35 versus the greenback.

Dollars exchanged went down to USD 1.06 billion on Monday from USD 1.7 billion on Friday.

“The peso weakened slightly after the uptick in core US personal consumption expenditures (PCE) inflation, which noted growing indications of tariff impacts to price levels in the US economy,” a trader said in a Viber message.

The PCE price index increased 0.2% last month after rising 0.3% in June, the US Commerce department’s Bureau of Economic Analysis said, Reuters reported. In the 12 months through July, the PCE price index advanced 2.6%, matching the rise in June.

Stripping out food and energy components, the PCE price index increased 0.3% after a similar rise in June. In the 12 months through July, core PCE inflation advanced 2.9%. That was the largest rise since February and followed a 2.8% gain in June. The US Federal Reserve tracks the PCE price measures for its 2% inflation target.

Though price pressures from tariffs on imports were mild last month, economists continued to expect the duties to drive up inflation in the second half of the year.

They also anticipate that increasing operating costs for businesses because of tariffs will eventually force employers to lay off workers, putting a damper on their spending.

Meanwhile, political stability concerns in Indonesia and Thailand also affected market sentiment, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

For Tuesday, the trader said the peso could recover on potentially softer US manufacturing data.

The trader sees the peso moving between PHP 57 and PHP 57.25 per dollar on Tuesday, while Mr. Ricafort expects it to range from P57.05 to P57.25. — A.M.C. Sy with Reuters