THE PESO may remain at P58 level against the dollar this week as markets await the outcome of the US presidential election.
The local unit closed at P58.10 against the dollar on Thursday, rising 13 centavos from Wednesday’s P58.23, data from the Bankers Association of the Philippines showed.
Week on week, the peso rose 22 centavos from P58.32 per dollar on October 25.
Philippine financial markets were closed on Friday (November 1) for All Saints’ Day.
“The peso could initially trade consolidatingly near the P58 mark ahead of the US elections, and future price movements will be based on the results,” the first trader said in a telephone interview.
“The local currency is likely to seek direction based on preliminary US election results and volatility can be expected in the foreign exchange market,” the second trader also said in an email.
The foreign exchange market could also take cues from the U.S. Federal Reserve’s Nov. 6-7 policy meeting, said Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort. in a Viber message.
The coming week will see a double dose of potentially market-moving events as Americans vote on their next president and the Federal Reserve offers more insight into interest rate movements at its monetary policy meeting, Reuters reported.
The November 5 vote culminates an election cycle that has captivated the country and sent swings in the corners of the financial markets. One was the waxing and waning of the so-called Trump trade, a slew of moves in asset prices that reflected sentiment that Republican Donald Trump is gaining momentum in his race against Democrat Kamala Harris for the US presidency.
These trades include a rise in the US dollar and a sell-off in government bonds, possibly fueled by strong economic data and a rise in bitcoin.
Yet polls remain deadlocked and Trump-leaning bets narrowed late last week. Some investors expect this week’s vote to be accompanied by volatility regardless of the outcome.
Thursday’s Fed decision on monetary policy looms as another risk. Fed Funds Futures trading shows the market expects the U.S. central bank to cut policy rates by a modest 25 basis points, LSEG data show, after cutting rates for the first time in four years in September.
For many investors, the focus will be on Fed Chairman Jerome H. Powell’s guidance, 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 major data before the Fed’s meeting, bucked that trend as it showed job growth had almost come to a standstill in October. However, the data was clouded by aerospace industry strikes and hurricanes that affected the wage survey response.
The release of October’s Philippine Consumer Price Indices (CPI) could also impact peso-dollar trading this week, Mr. Ricafort added.
A Business world Polls of eleven analysts yielded an average estimate of 2.4% for October’s CPI, within the BSP’s 2-2.8% forecast for the month.
If realized, headline inflation in October 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 fluctuating between P58 and P58.50 per dollar this week, while Mr. Ricafort expects it to fluctuate between P57.90 and P58.40. — AMC Sy of Reuters