Peso may move sideways as market awaits more Fed hints

THE PESO could continue to sideways against the dollar this week as investors remain cautious as they await further policy guidance from US Federal Reserve officials.

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On Friday, the local unit closed at P57.15 per dollar, weakening by nine centavos from its P57.06 finish on Thursday, data from the Bankers Association of the Philippines showed.

Meanwhile, week on week, the peso went up by five centavos from its P57.10 close on Sept. 12.

The local unit dropped as the dollar was generally stronger on Friday following a stronger-than-expected US jobless claims report, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“The dollar-peso closed lower, tracking the dollar’s recovery overnight ona less dovish Fed and lower than expected initial jobless payments,” a trader likewise said in a phone interview.

Early on Friday, the US dollar rose against major peers on news that fewer Americans filed new applications for unemployment benefits in the prior week, Reuters reported.

The number of Americans filing new applications for unemployment benefits fell, but the labor market has softened as both the demand for and supply of workers have diminished.

Though the report from the Labor department on Thursday confirmed layoffs remained relatively low, the hiring side of the labor market has almost stalled. Demand for workers has slowed, with economists blaming uncertainty stemming from tariffs on imports. At the same time, an immigration crackdown has reduced labor supply, creating what Federal Reserve Chair Jerome H. Powell on Wednesday described as a “curious balance.”

Economists welcomed the decline in applications as a sign of the economy’s resilience. Some even suggested that the US central bank’s concerns about the labor market were probably overblown and further interest rate cuts were unwarranted.

Initial claims for state unemployment benefits decreased 33,000 to a seasonally adjusted 231,000 for the week ended Sept. 13. Claims in the prior week had jumped to 264,000, a level last seen in October 2021.