Peso may be range-bound before PCE, Powell speech

The peso could trade sideways against the dollar this week ahead of the release of February US personal consumption expenditures (PCE) price index data and a speech by US Federal Reserve Chair Jerome H. Powell.

The local unit closed at PHP 56.27 per dollar on Friday, weakening by 24 centavos from its PHP 56.03 finish on Thursday, Bankers Association of the Philippines data showed.

This was the peso’s weakest close in more than one month or since its PHP 56.29-per-dollar finish on Feb. 5.

Week on week, the peso sank by 74 centavos from its PHP 55.53 close on March 15.

The peso dropped on Friday as the dollar was generally stronger, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The dollar was headed toward a second week of gains on Friday, after a slight rate hike in Japan gave the yen a slight reprieve and a surprise cut in Switzerland highlighted the gap in interest rate policy between the Federal Reserve and other central banks, Reuters reported.

The week marked a shift in global monetary policy as the Swiss National Bank and central banks in developing countries cut rates or indicated their intention to do so, with June the likely moment for the European Central Bank to move.

The Fed left its overnight rate on hold between 5.25-5.5% and stuck with projections for three cuts by year’s end. But it also said it would not cut until it was confident that inflation was sustainably declining toward its 2% target.

About 84 basis points of cuts are priced in for this year — much lower than the 160 or so at the start of the year — but higher than earlier in the week as rate cut bets gained steam.

The dollar index, a measure of the US currency against six major trading partners, rose 0.45% while the dollar weakened 0.12% against the Japanese yen at 151.44 per dollar.

The dollar was up about 1.5% last week versus the yen after approaching levels that prompted Japanese intervention in 2022.

The peso was also dragged down by a possible revision in the country’s gross domestic product (GDP) growth target for the year, Mr. Ricafort said.

The Development Budget Coordination Committee (DBCC) met on Friday to review their medium-term economic assumptions, Finance Secretary Ralph G. Recto said to reporters on Thursday.

Mr. Recto said the GDP growth target for this year may be revised downward from the current 6.5-7.5%.

The DBCC did not release a statement on Friday.

For this week, Mr. Ricafort said the peso could remain range-bound as the market looks ahead to Mr. Powell’s speech and the release of February PCE price index data on March 29.

He sees the peso moving between PHP 55.95 and PHP 56.45 per dollar this week. — A.M.C. Sy with Reuters