THE PESO may stay at the P58 level against the dollar this week as markets await the results of the US presidential vote.
The local unit closed at P58.10 versus the dollar on Thursday, rising by 13 centavos from its P58.23 finish on Wednesday, Bankers Association of the Philippines data showed.
Week on week, the peso went up by 22 centavos from its P58.32-per-dollar finish on Oct. 25.
Philippine financial markets were closed on Friday (Nov. 1) for All Saints’ Day.
“The peso may initially trade in consolidation near the P58 figure ahead of the US election and future price movement will be based on the results,” the first trader said in a phone interview.
“The local currency is likely to seek direction on the tentative results of the US elections and volatility can be expected in the foreign exchange market,” the second trader likewise said in an e-mail.
The foreign exchange market could also take cues from the US Federal Reserve’s policy meeting on Nov. 6-7, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
A double dose of potentially market-moving events arrives in the coming week as Americans vote on their next president and the Federal Reserve offers more insight on the path of interest rates at its monetary policy meeting, Reuters reported.
The Nov. 5 vote culminates an election cycle that has captivated the country and sparked swings in corners of financial markets. Among these has been the waxing and waning of the so-called Trump trade, a bevy of asset price moves reflecting sentiment that Republican Donald Trump is gaining momentum in his race against Democrat Kamala Harris for the US presidency.
Those trades have included a rise in the US dollar and a sell-off in Treasuries possibly fueled by strong economic data and a bitcoin surge.
Still, polls remain deadlocked and bets leaning toward Mr. Trump were narrowing at the end of last week. Some investors expect volatility to accompany this week’s vote, no matter the result.
Thursday’s Fed decision on monetary policy looms as another risk. Fed funds futures trading shows the market expects the US central bank to cut its benchmark policy rate by a modest 25 basis points, LSEG data showed, after easing rates in September for the first time in four years.
For many investors, the focus will be on guidance from Fed Chair Jerome H. Powell, including whether the central bank might consider pausing its rate-cutting cycle at future meetings in light of strong economic data.
Friday’s monthly employment report, the last key piece of data before the Fed meeting, ran counter to that trend as it showed job growth almost stalled in October. The data, however, was clouded by aerospace industry strikes and hurricanes that impacted the response rate for the payrolls survey.
The release of October Philippine consumer price index (CPI) data could also affect peso-dollar trading this week, Mr. Ricafort added.
A BusinessWorld poll of 11 analysts yielded a median estimate of 2.4% for the October CPI, within the BSP’s 2-2.8% forecast for the month.
If realized, October headline inflation would be faster than the 1.9% in September but slower than the 4.9% in the same month a year ago.
The first trader sees the peso moving between P58 and P58.50 per dollar this week, while Mr. Ricafort expects it to range from P57.90 to P58.40. — A.M.C. Sy with Reuters