Peso sinks on mixed US jobs data
THE PESO sank against the dollar on Monday on expectations of smaller rate cuts by the US Federal Reserve this year following mixed jobs data.
The local unit closed at P56.52 per dollar on Monday, weakening by 61.5 centavos from its P55.905 finish on Friday, Bankers Association of the Philippines data showed.
The peso opened Monday’s session at P56.20 against the dollar, which was also its intraday best. Its weakest showing was its closing level of P56.52 versus the greenback.
Dollars exchanged went down to $1.22 billion on Monday from $1.51 billion on Friday.
“The peso-dollar traded higher on buying pressure amid bets of fewer rate cuts by the Fed due to release of mixed jobs data last Friday,” a trader said by phone.
The dollar recovered some lost ground on Monday as investors who were undecided on the scale of a Federal Reserve rate cut expected later this month looked to this week’s US inflation data for more clues, Reuters reported.
Currencies struggled for direction after Friday’s highly anticipated US jobs data failed to offer clarity to traders on the question of whether the Fed would deliver a regular 25-basis-point (bp) rate cut or an outsized 50-bp one at its policy meeting next week.
While employment increased less than expected in August, the jobless rate ticked lower and wage growth remained solid, indicating that the US labor market was cooling, but not at a pace that warranted panic over the economy’s growth outlook.
Against a basket of currencies, the dollar edged up 0.13% to 101.33.
Fed policy makers on Friday signaled they are ready to kick off a series of interest rate cuts at the central bank’s upcoming meeting on Sept. 17-18, noting a cooling in the labor market that could accelerate into something more dire in the absence of a policy shift.
Futures show a 29% chance that the Fed could ease rates by half a percentage point next week, with Wednesday’s US inflation report the next main economic indicator that could alter market pricing.
The peso was also dragged down by demand for the dollar amid the seasonal increase in imports this quarter, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
For Tuesday, the trader said the peso may consolidate as the market awaits the release of August US inflation data.
The trader sees the peso moving between P56.30 and P56.70 per dollar on Tuesday, while Mr. Ricafort expects it to range from P56.40 to P56.60. — AMCS with Reuters