Peso to move sideways ahead of US GDP data

The peso may move sideways against the dollar this week ahead of the release of US gross domestic product (GDP) and personal consumption expenditures (PCE) data.

The local currency closed at PHP 55.97 versus the dollar on Friday, weakening by 13 centavos from Thursday’s PHP 55.84 finish, data from the Bankers Association of the Philippines’ website showed.

Week on week, the peso declined by 5.9 centavos from its PHP 55.911 close against the greenback on Jan. 12.

The peso opened Friday’s session at PHP 55.85 against the dollar. Its intraday best was at PHP 55.77, while its weakest showing was at PHP 56.02 versus the greenback.

Dollars exchanged went down to USD 1.39 billion on Friday from USD 1.43 billion on Thursday.

The peso depreciated on Friday as the dollar gained due to cautious statements from US Federal Reserve officials, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

San Francisco Federal Reserve Bank President Mary Daly on Friday said she believes the US economy and monetary policy are in a “good place,” and the risks have grown more balanced while work remains to bring down inflation, Reuters reported.

The words calibration, patience and gradualism suggested Ms. Daly believes Fed rate cuts will arrive but are not imminent.

Earlier on Friday, Ms. Daly said it would be “premature” to think interest-rate cuts were around the corner.

Ms. Daly is likely the last Fed policy maker to speak publicly before the Fed’s Jan 30-31 policy meeting, due to an agreed-upon quiet period running up to each meeting.

Comments from other policy makers last week and stronger-than-expected economic data have prompted traders to temper bets on a first Fed rate cut in March, pricing in a May start to rate cuts instead.

Markets took particular note of Fed Governor Christopher Waller, who said inflation is within “striking distance” of the Fed’s goal but that the central bank should move carefully and methodically.

The US central bank raised borrowing costs by a cumulative 525 basis points (bps) to 5.25-5.5% from March 2022 to July 2023.

The peso was dragged down by global crude oil prices reaching three-week highs recently amid tensions in the Red Sea, Mr. Ricafort added.

For this week, the peso may move sideways before the release of US GDP and PCE data, Security Bank Corp. Chief Economist Robert Dan J. Roces said in a Viber message. He expects the peso to move between PHP 55.80 and PHP 56.20 per dollar this week.

Meanwhile, Mr. Ricafort sees the local unit ranging from PHP 55.85 to PHP 56.05 versus the greenback. — AMCS with Reuters