THE PESO is expected to move sideways against the dollar this week amid likely upbeat domestic developments and potentially mixed US data.
The local currency ended last week at P52.21 versus the greenback, weakening by nine centavos from the P52.12 finish on Thursday, as the greenback recovered after the Wall Street鈥檚 rally.
However, the peso strengthened week-on-week from its P52.525-per-dollar finish last Jan. 25.
A market analyst said in an e-mail yesterday that the dollar is expected to strengthen against the peso in the first two days of the week supported by the upbeat US employment report.
The US economy added 304,000 new jobs in January, exceeding the expectations of a 180,000 rise in payrolls.
However, the unemployment rate rose to four percent from December鈥檚 3.9%, partly due to the 35-day partial US government shutdown.
鈥淯S job creation reached an 11-month high in January 2019, supporting views that a rate hike this year from the US Federal Reserve is still on the table, despite some dovish hints from various US policy makers,鈥 the analyst said.
The analyst added that the dollar鈥檚 upward momentum might be tempered by the 鈥渓ikely softer Philippine inflation report鈥 for the first month of the year.
Headline inflation likely decelerated last month as food prices sustained its declined, offsetting the effects of higher oil prices. A 大象传媒 poll of 12 analysts yielded a 4.5% median estimate for the January rate, which if realized will be slower than the actual 5.1% tallied in December.
Still, after depreciating in the first few days, the peso may bounce back on the back of potentially softer US data on non-manufacturing and fourth-quarter gross domestic product (GDP) growth.
鈥淏ased on forecasts, the US economy likely expanded by 2.5% in the fourth quarter of 2018 after growing by 3.4% in the prior three months,鈥 the analyst said.
This, along with stronger domestic industrial production and possible hawkish remarks from the Bangko Sentral ng Pilipinas鈥 policy meeting on Thursday, may improve peso鈥檚 appeal and weaken the dollar.
All economists covered by the poll expect the local central bank to keep its benchmark rates steady at the 4.25-5.25% range during its first review for the year scheduled this week.
For this week, the analyst expects the peso to trade between P52 and P52.70 versus the dollar, while a foreign exchange trader gave a slimmer P52-P52.45 range. — Karl Angelo N. Vidal

RELATED ARTICLESMORE FROM AUTHOR