THE PESO could move sideways this week ahead of more data releases in the United States.
On Friday, the local unit closed at P51.905 versus the greenback, 10.5 centavos stronger than its Thursday close of P52.01, data from the Bankers Association of the Philippines (BAP) revealed.
On a week-on-week basis, the peso strengthened by 14 centavos from its P52.05-to-a-dollar close on Aug. 30.
“General market perception may have also been a factor due to positive US economic data recently released,” UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said.
“Expect the peso this week to move within P51.70 to P52.00 as the market expects more positive signs from the US economic data releases,” Mr. Asuncion added.
The US manufacturing sector contracted in August for the first time since 2016 amid worries about a weakening global economy and rising trade tensions between China and the US, an industry report released last Tuesday showed.
The Institute for Supply Management (ISM) said its index of national factory activity decreased to 49.1, the lowest level since January 2016.
This compared with a figure of 51.2 in July. Analysts polled by Reuters had forecast a reading of 51.1 for August.
Meanwhile, US services sector activity accelerated in August and private employers boosted hiring, suggesting the economy continued to grow at a moderate pace despite trade tensions which have stoked financial market fears of a recession.
The Institute for Supply Management (ISM) said its non-manufacturing activity index increased to a reading of 56.4 in August from 53.7 in July. A reading above 50 indicates expansion in the sector, which accounts for more than two-thirds of US economic activity.
Economists polled by Reuters had forecast the index would rise to 54.0 in August. The ISM said businesses “remain concerned about tariffs and geopolitical uncertainty,” but also noted “they are mostly positive about business conditions.”
On the other hand, US job growth slowed more than expected in August, with retail hiring declining for a seventh straight month, but strong wage gains should support consumer spending and keep the economy expanding moderately amid rising threats from trade tensions.
The US Labor department’s closely watched monthly employment report on Friday also showed a rebound in the workweek after it shrunk to its shortest in nearly two years in July, suggesting that companies were not yet laying off workers.
Non-farm payrolls increased by 130,000 jobs last month, flattered by temporary hiring of 25,000 workers for the 2020 census. The economy created 20,000 fewer jobs in June and July than previously reported. Economists polled by Reuters had forecast payrolls rising by 158,000 jobs in August.
More US data are dye for release this week such as the August producer price index report, data on wholesale inventories, jobless claims, retail sales, as well as the August consumer price index. — with Reuters