Peso rises on profit-taking after sharp depreciation

The PESO rebounded slightly against the dollar on Tuesday due to profit-taking, after the currency fell to a more than 18-month low the previous trading day.

The local unit closed at P57.84 per dollar on Tuesday, up two centavos from P57.86 on Monday, data from the Bankers Association of the Philippines showed.

Monday’s closing rate was the peso’s worst since the rate of P58.19 per dollar on Nov. 10, 2022.

The peso opened Tuesday’s session slightly stronger at P57.85 against the dollar. The intraday best stood at P57.80, while the weakest was at P57.89 against the dollar.

Dollars exchanged rose to $1.135 billion on Tuesday from $1.132 billion on Monday.

“The peso recovered somewhat thanks to proFit increases by market participants after reaching the bottom [on Monday],” one trader said in an email.

The peso was also supported by a generally weaker dollar on Tuesday, ahead of major US currenciesFation reports and the speech of Jerome H. Powell, Chairman of the U.S. Federal Reserve, Rizal Commercial BankING Corp. Chief Economist Michael L. Ricafort said. in a Viber message.

The dollar rose on Tuesday as traders awaited US inflation data, Reuters reported.

Traders are awaiting the U.S. Consumer Price Index, due Wednesday, to gauge what path the Federal Reserve will take this year, in the wake of recent softer-than-expected U.S. labor market data and comments from officials indicating the central bank was unlikely to doing. increase rates further.

Money markets have reversed their expectations of Fed rate cuts this year due to persistent inflation and are now pricing in an easing of about 40 basis points this year, compared to the 150 basis points of rate cuts expected in early 2024. According to CME’s FedWatch tool, the first rate cut, with a 50% chance, won’t happen until September.

Nearly two-thirds of economists polled by Reuters expect the Fed to cut its key interest rate twice this year, starting in September.

U.S. inflation this week is expected to show core consumer prices rising 0.3% month-on-month in April, compared with 0.4% growth the month before, a Reuters poll showed.

But before that, U.S. Producer Price Index data was due to be released later on Tuesday, which analysts will sift through to get a sense of whetherFThe economy is moving toward the Fed’s target of 2%.

Meanwhile, the dollar index, which measures the US currency against six rivals, was last up 0.17% at 105.37. The index fell by almost 1% in May.

For Wednesday, the trader said the peso is likely to remain weak due to Powell’s speech scheduled for tonight.

The trader sees the peso moving between P57.65 and P57.90 per dollar on Wednesday, while Mr. Ricafort expects the peso to trade from P57.75 to P57.95. — AMC Sy of Reuters