Peso seen range-bound
THE PESO may trade sideways against the dollar this week as market players stay on the sidelines ahead of the long weekend amid political noise offshore, as well as due to bets of mixed US economic reports.
The peso ended at P50.08 versus the greenback on Friday, nine-and-a-half centavos higher from the previous session’s close of P50.175-per-dollar.
Week on week, the local currency gained eight centavos from its P50.16 close last March 31.
An economist from a local bank said the peso may move sideways against the greenback this week, falling within P50.00 to P50.20, on the back of possible mixed US economic data and heightened political risks in the United States and the European Union.
“The dollar might just move sideways this week amid mixed US economic reports and caution ahead of the long weekend, during which the US will release its March 2017 inflation report,” Land Bank of the Philippines ( Landbank) Market Economist Guian Angelo S. Dumalagan said in an e-mail over the weekend.
Local markets will be closed on April 13-14 in observance of Maundy Thursday and Good Friday.
“New York Fed President William Dudley’s hawkish comment, which affirmed the need for more US rate hikes this year, might also provide the dollar an initial boost,” Mr. Dumalagan said.
Reuters reported that Mr. Dudley said the US Federal Reserve may avoid hiking interest rates at the same time that it trims its $ 4.5- trillion bond portfolio, which could mean a small break for the US regulator’s policy tightening plans in the near future.
Global markets are anticipating the US central bank to raise rates at least two to three times this year after it hiked borrowing costs during its March 14-15 Federal Open Market Committee meeting by 25 basis points to within 0.75%-1%, shortly after policy makers decided to raise interest rates last December 2016.
Mr. Dumalagan said the dollar’s gain against the peso could likely be trimmed on bets of upbeat data on local exports and industrial production and profit taking ahead of the long weekend, while bets of steady US inflation could cap the dollar’s depreciation.