Peso may climb further vs dollar on Fed bets after soft jobs data

THE PESO could climb against the dollar this week as soft US labor data bolstered bets of a US Federal Reserve rate cut this month.

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On Friday, the local unit closed at P56.915 per dollar, strengthening by 6.5 centavos from its P56.98 finish on Thursday, data from the Bankers Association of the Philippines showed.

Week on week, the peso also climbed by 15 centavos from its P57.13 close on Aug. 29.

The peso rose against the dollar on Friday following the release of Philippine inflation data for August, which supported expectations of another cut by the Bangko Sentral ng Pilipinas (BSP) this year as it remained below the 2-4% target, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“The dollar-peso initially rallied to P57.04 as higher inflation data supported more monetary easing from the BSP. However, profit taking dragged the peso ahead of US NFP (nonfarm payrolls) to be released overnight,” a trader said in a phone interview.

Philippine headline inflation picked up to a five-month high of 1.5% in August from 0.9% in July, the government reported on Friday.

This was slightly higher than the 1.3% median estimate in a Business World poll of 16 analysts, but was slower than 3.3% in the same month a year ago and was within the BSP’s 1%-1.8% forecast.

It also marked the sixth straight month that the consumer price index was below the central bank’s 2-4% annual target.