Peso extends slide before US consumer inflation data

The peso sank further against the dollar on Wednesday, inching close to its record low, on expectations of faster US consumer inflation and amid fresh hostilities in the Middle East.

The currency shed seven centavos to end at PHP 62.87 versus the greenback from its P62.80 finish on Tuesday, Bankers Association of the Philippines data showed.

The local unit opened the session stronger at PHP 62.70 per dollar and climbed to an intraday high of PHP 62.65. Meanwhile, its weakest showing was at P62.88, near its all-time-low finish of PHP 62.90 recorded on Oct. 8.

Dollars traded declined to USD 941 million from USD 1.022 billion.

“The dollar-peso traded higher on expectations of a higher US inflation release tonight,” a trader said by phone.

The peso was also dragged by rising global crude oil prices following renewed tensions in the Strait of Hormuz, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

For Thursday, the trader said the peso could test the PHP 63 level if the US consumer price index (CPI) comes out higher than market expectations, likely ranging from PHP 62.65 to PHP 63, while Mr. Ricafort expects it to move between PHP 62.75 and PHP 62.95.

The dollar index, which measures the greenback against a basket of currencies, fell 0.09% to 102.09, following a 0.35% slide on Tuesday, Reuters reported.

Attention now focuses on the release of US consumer price index data as well as speeches from Federal Reserve policymakers that could clarify the outlook for interest rates. The US Labor department is due to release its CPI for September, which is expected to have risen 0.6% month-on-month after increasing 0.4% in August, while annual inflation is seen accelerating to 3.6% from 3.4%. Additionally, the Fed is due to publish its Beige Book.

Meanwhile, oil prices rose following attacks on two vessels in the Strait of Hormuz and after Iranian officials told Reuters they were deploying new tactics to target ships, raising the risk of fresh disruption to energy supplies.

Brent crude futures, which are around their highest in nearly two weeks, were last up nearly 1% on the day at $106.5 a barrel. — Aaron Michael C. Sy with Reuters