The PESO rose further against the dollar on Wednesday as the market awaits the July US Consumer Price Index (CPI) report, which could reinforce expectations of a US Federal Reserve interest rate cut in September.
The local unit closed at P56.955 per dollar on Wednesday, up half a centavo from Tuesday’s close of P56.96, data from the Bankers Association of the Philippines showed.
This was the peso’s strongest exchange rate in nearly four months or since its closing rate of P56.808 per dollar on April 15.
The peso opened Tuesday’s session stronger at P56.90 against the dollar. The weakest performance was P57.12, while the best intraday price was P56.835 against the dollar.
Dollars exchanged fell to $1.34 billion on Wednesday from $1.799 billion on Tuesday.
“The peso-dollar later moved sideways ahead of US inflation data. The market expects a higher US CPI. We saw some light buying earlier in the session due to bets on higher-than-expected CPI data,” a trader said by phone.
The peso rose slightly amid the dollar’s decline following the release of the U.S. Producer Price Index (PPI) overnight, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said. in a Viber message.
The dollar hovered around a one-week low on Wednesday as traders expected U.S. consumer price data later in the day to keep the Fed on course to cut rates next month, Reuters reported.
Traders were largely cautious on the USFData at 12:30 GMT (8:30 a.m. ET) showed consumer prices rose 0.2% month-on-month in July, after falling 0.1% a month ago.
The dollar index – which measures the greenback against other major currencies – fell 0.1% to 102.52, after falling 0.5% on Tuesday as a slower-than-expected rise in producer prices raised hopes for a US interest rate cut reinforced next month.
Traders widely expected a September rate cut ahead of the producer price data and increased their bets for a massive 50 basis point cut after the release to 52.5%, up from 50% a day earlier, according to CME’s FedWatch Tool.
Before Thursday, the trader said the peso’s movement against the dollar would depend on the Philippine central bank’s policy decision.
The trader expects the peso to move between P56.80 and P57.20 per dollar, while Mr. Ricafort expects it to fluctuate between P56.85 and P57.05. —AMC Sy of Reuters