The PESO may remain at P58 rate against the dollar this week as markets await the results of the US presidential vote.
The local unit closed at P58.10 against the dollar on Thursday, up 13 centavos from its close of P58.23 on Wednesday, data from the Bankers Association of the Philippines said.
Week-to-week, the peso rose 22 centavos from its close of P58.32-per-dollar on Oct. 25.
Philippine stock markets are closed on Friday (Nov. 1) for All Saints’ Day.
“The peso may start trading around the P58 figure ahead of the US election and future price movements will be based on the results,” the first trader said in a phone interview.
“The local currency is likely to seek guidance from the US election results and volatility can be expected in the foreign exchange market,” a second trader said in an email.
The foreign exchange market may also take action from the US Federal Reserve’s policy meeting on November 6-7, Rizal Commercial Banking Corp. Chief Economist. Michael L. Ricafort in a Viber message.
A double dose of potentially market-shaking events comes next week as Americans vote for their next president and the Federal Reserve offers more insight into interest rates at its monetary policy meeting, Reuters reports.
The vote on Nov. 5 is culminating in an election cycle that has captivated the country and caused volatility in the corners of the financial markets. Among these was a decline in the so-called Trump trade, a stock price index that reflects sentiment that Republican Donald Trump is gaining ground in his race with Democrat Kamala Harris for the US presidency.
Those trades included a rise in the U.S. dollar and a selloff in Treasuries likely spurred by strong economic data and a surge in bitcoin.
However, the polls remain closed and the bet depends on Mr. Trump was declining at the end of last week. Some investors expect volatility to accompany this week’s vote, regardless of the outcome.
Thursday’s decision by the Fed on monetary policy looks like another risk. Fed funds futures show the market expects the US central bank to cut its policy rate by 25 basis points, LSEG data showed, after cutting rates in September for the first time in four years.
For many investors, the focus will be on guidance from Fed Chairman Jerome H. Powell, including whether the central bank may consider halting its rate-cutting cycle at future meetings due to strong economic data.
Friday’s monthly employment report, the last important data before the Fed’s meeting, bucked that trend as it showed job growth nearly stalled in October. The data, however, was clouded by aerospace industry strikes and hurricanes that affected the response rate to the pay survey.
The release of Philippine consumer price index (CPI) data for October may affect the peso-dollar trade this week, Mr. Ricafort added.
A BusinessWorld a survey of 11 analysts showed an average estimate of 2.4% CPI for October, within the BSP’s forecast of 2-2.8% for the month.
If possible, headline inflation in October would have been faster than 1.9% in September but slower than 4.9% in the same month last year.
The first trader sees the peso moving between P58 and P58.50 per dollar this week, while Mr. Ricafort expects it to go from P57.90 to P58.40. – AMC Sy with Reuters
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