Peso slips ahead of US CPI data

The peso inched lower against the dollar on Tuesday as markets awaited the release of the latest US consumer inflation data overnight, which could affect the US Federal Reserve’s policy path.

The local unit closed at PHP 57.075 per dollar, weakening by 3.5 centavos from its PHP 57.04 finish on Monday, Bankers Association of the Philippines data showed.

The peso opened Monday’s session sharply weaker at PHP 57.14 against the dollar. Its intraday best was at PHP 57.04, while its worst showing was at PHP 57.23 against the greenback.

Dollars exchanged went down to USD 1.83 billion on Tuesday from USD 2.19 billion on Monday.

The local unit was lower as the dollar gained on Tuesday amid expectations of slightly faster US July inflation, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“The dollar-peso was range-bound today ahead of the release of US inflation data later tonight,” a trader said in a phone interview.

The dollar was also supported by the 90-day extension of the tariff truce between the US and China, Mr. Ricafort said.

For Wednesday, the trader sees the peso moving between PHP 57 and PHP 57.40 per dollar, while Mr. Ricafort expects it to range from PHP 56.95 to PHP 57.20.

The dollar was flat on Tuesday as market enthusiasm about Washington and Beijing extending their tariff truce to November was tempered by jitters about US inflation data later in the day, Reuters reported.

US President Donald J. Trump signed an executive order overnight pausing triple-digit levies on Chinese imports for another 90 days.

But the upcoming US consumer price index (CPI) data were more important to the direction of markets, investors said, because it comes just after a surprisingly weak jobs report on Aug. 1 and as businesses increasingly report inflationary pressures.

Ahead of the CPI data due at 1230 GMT, the dollar was up 0.1% to 148.31 yen, while the euro was flat at USD 1.1613.

“If we see an inflation print that is above consensus that is going to make it very difficult for the Federal Reserve to cut interest rates,” Foresight Group fund manager Mayank Markanday said.

“We are probably going to see more data validating fears that (US) stagflation is a key risk,” he added, referring to an economic scenario of slowing growth and rising inflation that has not been prevalent in the US since the 1970s.

Investors are currently pricing in at least two rate cuts in 2025, adding to pressure on the dollar, which has also been weighed down by policy uncertainty and Mr. Trump’s personal attacks on Federal Reserve Chair Jerome H. Powell for keeping monetary policy tight. — A.M.C. Sy with Reuters