Tuesday, July 23, 2024
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THE PESO could trade sideways against the dollar this week ahead of the release of US gross domestic product (GDP) data for the second quarter and the US Federal Reserve’s preferred inflation gauge.

The local unit closed at P56.57 versus the dollar on Friday, strengthening by 19 centavos from Thursday’s P56.76 finish, data from the Bankers Association of the Philippines’ website showed.

A week on week, however, the peso dropped by 39 centavos from its P56.18 close on Aug. 18. The local unit opened Friday’s session at P56.80 per dollar. Its weakest showing was at P56.84, while its intraday best was at P56.48 against the greenback.

Dollars traded rose to $1.32 billion on Friday from $1.13 million on Thursday.

The peso rose against the dollar on Friday as the market awaited signals from Fed Chair Jerome H. Powell’s speech at the Kansas City Jackson Hole Economic Policy Symposium over the weekend, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The Federal Reserve may need to raise interest rates further to cool still-too-high inflation, Mr. Powell said on Friday, promising to move with care at upcoming meetings as he noted both progress made on easing price pressures as well as risks from the surprising strength of the US economy, Reuters reported.

While not as hawkish a message as he delivered this time a year ago at the annual Jackson Hole Economic Policy Symposium, Mr. Powell’s remarks still had a punch, with investors now seeing one more rate hike by yearend more likely than not.

But with “signs that the economy may not be cooling as expected,” including “especially robust” consumer spending and a “possibly rebounding” housing sector, Mr. Powell said that above-trend growth “could put further progress on inflation at risk and could warrant further tightening of monetary policy.”

The Fed raised interest rates by 25 basis points (bps) last month, bringing its benchmark overnight rate to a range between 5.25% and 5.5%. It has hiked rates by a cumulative 525 bps since it began its tightening cycle in March last year.

The Federal Open Market Committee will next meet on Sept. 19-20 to review policy. For this week, Mr. Ricafort said the peso could trade sideways ahead of releasing the US personal consumption expenditures price index and second-quarter GDP growth data.


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