Peso weakens as players eye Fed gathering

The peso weakened against the dollar on Tuesday as market players awaited the US Federal Reserve’s Jackson Hole symposium, where officials are expected to provide clues on the central bank’s policy path.

The local unit closed at PHP 57.10 per dollar, declining by 13.5 centavos from its PHP 56.965 finish on Monday, Bankers Association of the Philippines data showed.

The peso opened Tuesday’s session weaker at PHP 57.05 against the dollar. Its intraday high was at PHP 57.01, while its worst showing was at PHP 57.18 against the greenback.

Dollars traded rose to USD 1.98 billion on Tuesday from USD 1.48 billion on Monday.

“The peso weakened due to lingering market caution ahead of potential policy signals from Fed Chair Powell during this week’s Jackson Hole symposium,” a trader said in a Viber message.

The local unit dropped as the greenback was broadly stronger early in the session before the Fed gathering, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said via a Viber message.

The US dollar made tepid gains against its major peers early on Tuesday as global markets assessed the outcome of a White House summit with European nations that could determine the next phase of the war in Ukraine, Reuters reported.

The dollar index rose 0.1% to 98.192 after US President Donald J. Trump told President Volodymyr Zelensky on Monday that the United States would help guarantee Ukraine’s security in any deal to end the war with Russia.

In the afternoon, the dollar slipped as markets awaited policy cues from an annual Federal Reserve symposium later this week, where Fed Chair Jerome H. Powell is due to speak on the economic outlook and the central bank’s policy framework.

The euro and sterling hovered between modest gains and losses against the dollar and were last up about 0.2% and 0.1% at USD 1.1683 and USD 1.3520, respectively. The Japanese yen and Swiss franc ticked higher as well.

Money markets reflect an 83.6% chance of a quarter-point rate cut at the Fed’s meeting on Sept. 17, according to CME FedWatch.

For Wednesday, the trader sees the peso moving between PHP 57 and PHP 57.25 per dollar, while Mr. Ricafort expects it to range from PHP 56.95 to PHP 57.25. — A.M.C. Sy with Reuters