Peso weakens as traders eye US data

The peso depreciated against the dollar on Wednesday as players chose to take positions before the release of key US economic data that could affect the US Federal Reserve’s policy stance.

The currency declined by 7.5 centavos to end at PHP 62.64 versus the greenback from its PHP 62.565 finish on Tuesday, data from the Bankers Association of the Philippines’ website showed.

The local unit opened Wednesday’s session slightly stronger at PHP 62.50 per dollar, which was also its intraday high. Its weakest showing was PHP 62.67 against the greenback.

Dollars traded went down to USD 1.426 billion from USD 1.484 billion.

“The dollar-peso closed a bit higher, but traded mostly sideways on cautious positioning ahead of key US data releases this week,” a trader said in a phone interview, referring to labor data

The greenback was also supported by US Treasury yields reaching new highs, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

For Thursday, the trader expects the peso to move between PHP 62.40 and PHP 62.80 against the dollar, while Mr. Ricafort sees it ranging from PHP 62.50 to PHP 62.75.

The dollar hovered near its highest level of the year against the euro on Wednesday and was on track for its biggest monthly gain versus the single currency in 14 months, buoyed by stronger US growth and rising interest rate expectations, Reuters reported.

The euro has been one of the worst-performing G10 currencies this year, pressured by Europe’s energy and debt worries. The dollar has gained nearly 2.3% against the euro in September, putting it on course for a third consecutive quarterly advance.

A run of data pointing to a resilient US economy and persistent inflation prompted the Federal Reserve to raise interest rates earlier this month for the first time in three years. Traders subsequently priced in a more aggressive path for US monetary policy relative to the euro zone, where growth remains weaker and debt concerns are mounting.

Some of that hawkish Fed pricing eased on Wednesday after New York Fed President John Williams said there was “no need for urgency” in raising rates.

The euro edged up to USD 1.135 but remained close to the May 2025 low touched in the previous session. It was also testing support near JPY 178.

Traders have cut expectations for a 25-basis-point Fed rate increase this month to about 44%, from around 70% earlier this week, according to CME Group’s FedWatch tool.

The dollar has strengthened against most major currencies in September, supported by Treasury yields that have climbed to multi-year highs. — Aaron Michael C. Sy with Reuters