Peso to move sideways before June CPI

THE PESO could move sideways against the dollar this week as the market awaits the release of June Philippine inflation data, which could ease from the prior month but stay above target amid continued price risks.

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On Friday, the currency strengthened by 15 centavos to close at P61.415 per dollar from Thursday’s P61.565 finish.

Week on week, however, the peso declined by 12.5 centavos from its P61.29 close on June 26.

“The peso was supported by the dollar’s drop after weaker-than-expected US nonfarm payrolls data eased US Federal Reserve rate hike expectations,” a trader said by phone on Friday.

“The Japanese yen’s climb following intervention signals also boosted regional currencies, including the peso,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The US dollar was heading towards its biggest weekly loss in 12 weeks on Friday after Thursday’s tepid US jobs report cooled market expectations for a near-term Federal Reserve interest rate hike, providing relief for the Japanese yen, Reuters reported.

The dollar fell after US job growth slowed sharply in June and payroll gains for the prior two months were revised lower, prompting traders to trim bets on a near-term Fed rate rise.

Markets are pricing in about a 45% chance for a hike at the September meeting, according to the CME FedWatch tool. US Treasuries were closed on Friday for the Independence Day holiday.

The dollar index, which measures the US currency against a basket including the yen and the euro, was roughly 0.2% lower at 100.83 after a 0.5% dip on Thursday. It was down 0.5% for the week, the biggest weekly drop since early April.

Although the yen has recovered from 40-year lows, investors remained on alert for possible intervention during a holiday-thinned session with US markets closed for Independence Day.