Peso rebounds vs dollar before Fed meet, US CPI
THE PESO rebounded against the dollar on Tuesday on expectations of slower May US consumer inflation and ahead of the US Federal Reserve’s policy decision.
The local unit closed at P58.68 per dollar on Tuesday, rising by 11 centavos from its P58.79 finish on Monday, Bankers Association of the Philippines data showed.
The peso opened Tuesday’s session stronger at P58.74 against the dollar. Its weakest showing was at P58.745, while its intraday best was at P58.66 versus the greenback.
Dollars exchanged rose to $1.05 billion on Tuesday from $604.85 million on Monday.
“The peso gained strength amid market hopes of a cooler-than-expected US consumer inflation report,” a trader said in an e-mail.
The peso also rose against the dollar ahead of the US Federal Reserve’s policy meeting, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
The biggest scheduled economic developments of the week are due on Wednesday, with the US consumer price index (CPI) and the Federal Reserve policy decision, Reuters reported.
The Fed is considered certain to hold steady at the conclusion of its two-day meeting on Wednesday, with the focus on whether it keeps three rate cuts in its “dot plot” projections for this year.
Futures imply 37 basis points (bps) of Fed easing for this year, compared with 50 bps before the jobs report was released last Friday.
Meanwhile the US CPI is forecast to rise a slim 0.1% in May, but with the core up 0.3%.
Philippine financial markets are closed on Wednesday, June 12, for the Independence Day holiday.
For Thursday, the trader said the peso could decline again due to potentially hawkish statements from the US central bank at the end of their two-day meeting.
The trader expects the peso to move between P58.55 and P58.80 on Thursday, while Mr. Ricafort sees it moving between P58.55 to P58.75 per dollar. — AMCS with Reuters