Peso to stay at P61 level as war continues

THE PESO may continue to move sideways against the dollar this week as players remain cautious over developments in the Middle East, with prospects of an end to the four-month war still dim.

On Friday, the local unit closed at P61.29 per dollar, unchanged from the previous day’s close.

Week on week, the peso fell by 51.5 centavos from its P60.775 finish on June 19.

“The dollar-peso closed flat and traded within a narrow range of P61.20 to P61.36 due to a lack of catalysts from the market,” a trader said by phone.

The peso was steady even as the dollar was mostly weaker on Friday following the release of US personal consumption expenditures (PCE) price index data that led players to reprice their Federal Reserve hike bets, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The dollar fell for a second straight session on Friday as recent economic data and a drop in oil prices slightly cooled expectations for Federal Reserve rate hikes, although the yen remained in territory that left it primed for an intervention, Reuters reported.

The Commerce department said the PCE price index surged 4.1% in the 12 months through May for the largest increase and the first reading above 4% since April 2023. On a month-over-month basis, the PCE increased 0.4%, just below the 0.5% estimate.

Markets are still pricing in an increase in rates of roughly 25 basis points from the Fed this year, according to LSEG data.

For this week, the trader said the peso could trade sideways as the market stays cautious on the developments between the US and Iran, and ahead of more key US economic data.

Mr. Ricafort likewise said US labor and manufacturing data to be released this week could affect peso trading.

Both the trader and Mr. Ricafort see the peso moving between P61 and P61.50 per dollar this week. — Aaron Michael C. Sy