THE PESO may stay at the P57-a-dollar level this week as the market awaits US Federal Reserve Chair Jerome H. Powell’s speech at the Jackson Hole Economic Policy Symposium, which could provide hints on the US central bank’s next policy move.
The local unit closed at P57.245 per dollar on Friday, weakening by 34.5 centavos from its P56.90 finish on Thursday, Bankers Association of the Philippines data showed.
Still, week on week, the peso rose by 3.5 centavos from its P57.28 finish on Aug. 9.
The peso slid back to the P57 level on Friday amid stronger-than-expected US retail sales and jobless claims data, which reduced fears of a recession in the world’s largest economy, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
The dollar fell against the yen on Friday, and was softer against other peers as traders took profits and investors sifted through economic data to gauge the Fed’s appetite for interest rate cuts, Reuters reported.
Disappointing US housing numbers also kept pressure on the greenback, helping it shed some of the lift it got a day earlier from data showing inflation trending down and consumer resilience.
Data on Thursday showed the number of Americans filing new applications for unemployment benefits dropped to a one month-low, while US retail sales increased by the most in 1-1/2 years in July, dashing expectations that the Fed could cut interest rates by 50 basis points (bps) next month.
Odds for such a move are now 25.5%, according to the CME Group’s FedWatch Tool.
The dollar index, which measures the greenback against six other major currencies, fell 0.48% to 102.54.
For this week, the main catalyst for the foreign exchange market would be Mr. Powell’s speech at the 2024 Jackson Hole Economic Policy Symposium in Wyoming on Friday (Aug. 23), Security Bank Corp. Chief Economist Robert Dan J. Roces said in a Viber message.
Global central bank officials will speak at the symposium in Jackson Hole, with Mr. Powell’s keynote speech on Friday potentially setting expectations for a US rate cut trajectory, Reuters reported.
Chicago Fed chief Austan Goolsbee said in an interview with National Public Radio that central bank officials should be wary of maintaining restrictive policy longer than necessary.
Financial markets are betting on a 74.5% likelihood that the Fed will cut its key policy rate by 25 basis points (bps) as it ends its September policy meeting, with a diminishing 25.5% chance of a super-sized 50-bp cut, CME’s FedWatch tool showed.
Mr. Ricafort added that the release of minutes of the Fed’s July 30-31 policy meeting on Wednesday (Aug. 21) could also affect peso-dollar trading this week.
The Fed last month kept its benchmark overnight interest rate at the current 5.25%-5.5% range for the eight straight meeting, but signaled that a rate cut could come as soon as September if inflation continued to cool.
Mr. Ricafort sees the peso moving between P57 and P57.50 versus the dollar this week. — AMCS with Reuters
