THE PESO rose further against the dollar on Thursday as more data pointing to cooling US inflation pared market bets on a US Federal Reserve rate hike.
The currency strengthened for a second straight day, climbing by 6.6 centavos to close at P61.62 versus the greenback from P61.686 on Wednesday, based on data from the Bankers Association of the Philippines’ website.
The local unit opened Thursday’s session stronger at P61.60 per dollar, which was also its intraday best. Meanwhile, its worst showing was at P61.70 against the greenback.
Dollars exchanged went up to $1.293 billion from $1.146 billion previously.
“The pair tracked the dollar’s correction overnight after the lower-than-expected US PPI (producer price index) print scaled back Fed rate hike expectations,” a trader said by phone.
However, ongoing Middle East tensions continue to cap the peso’s climb, the trader added.
The peso was supported by the slight downward correction in global crude oil prices, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
“Global crude oil prices lingered among one-month highs recently after the US carried out another round of attacks on Iran in a bid to secure shipping through the Strait of Hormuz. The US completed more airstrikes on Iran and said it disabled an unladen oil tanker headed for a port in Iran. Tanker traffic in the Strait of Hormuz continued,” he said.
For Friday, Mr. Ricafort sees the peso ranging from P61.50 to P61.70 against the greenback.
The trader said the peso could trade within P61.50 to P61.75 as the market continues to monitor developments in the Middle East, as well as initial US jobless claims data.
The dollar hovered near its one-month low on Thursday as investors weighed subdued US inflation data, which dampened rate hike expectations, against the risk of a further oil price spike that could support the greenback, Reuters reported.
US Treasury yields fell on Wednesday after a second consecutive day of data pointed to moderating inflation pressures, undermining expectations for a Federal Reserve tightening move and support for the greenback.
The US economy is less exposed to energy shocks than many of its peers, helping attract safe-haven flows into the dollar when oil prices rise, often at the expense of the euro and yen. Conversely, a diplomatic breakthrough in the Middle East tends to weaken the greenback against both currencies as lower oil prices improve the outlook for energy-importing economies.
Oil prices turned lower on Thursday as traders took profits while assessing the risks from a new wave of US strikes on Iranian military installations.
The US dollar index, which tracks the currency against six peers, was little changed at 100.48, hovering near its lowest since June 18. It has fallen 0.8% over the previous two sessions and is on track for a weekly decline.
Chances for a Fed hike in July were slashed to 11%, versus a 45% implied probability at the start of the week. Markets still see even odds of at least a 25-basis-point increase in September, according to Fed funds futures prices via CME Group. — A.M.C. Sy with Reuters
