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Peso seen sideways on US data

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Peso Dollar 120518 - Peso seen sideways on US data

THE PESO may move sideways against the dollar in the first two days of the week following better-than-expected economic growth data in the United States and the upgrade of a Japanese debt watcher of the country’s rating outlook.

The local unit closed last week at P52.18 versus the greenback, down four centavos from its previous finish, following the release of a strong US durable goods report. Week on week, the peso weakened from the P51.765 finish recorded last April 17.

A market analyst said in an e-mail yesterday that the dollar is seen to strengthen versus the peso after the first-quarter expansion of the US economy came in better than expected.

The US Commerce Department reported Friday that the world’s largest economy grew 3.2% in the first three months of the year, faster than the 2.2% gross domestic product (GDP) expansion a quarter ago.

“The report affirmed views that the US economy is not heading towards a recession, even as inflationary pressures are moderating,” the market analyst said.

Even as the peso is projected to weaken versus the dollar, Rizal Commercial Banking Corp. economist Michael L. Ricafort said the Japan Credit Rating (JCR) Agency’s upgrade of its Philippine rating outlook may support the local unit.

The government’s Investor Relations Office said JCR raised its outlook on the country’s BBB+ rating to positive from stable. This placed the Philippines’ rating a notch away from a single-A credit grade.

“Global crude oil prices declined from six-month highs and the 10-year US government bond yield eased despite higher than expected US GDP data,” Mr. Ricafort added.

For Monday and Tuesday, Mr. Ricafort expects the peso to move between P52 and P52.30, while the market analyst gave a P52-P52.70 range for the entire week.

Financial markets will be closed on Wednesday for Labor Day. — Karl Angelo N. Vidal

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