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Peso seen to trade sideways ahead of rate-setting moves

THE PESO could trade sideways versus the dollar this week ahead of the rate-setting meetings by the US Federal Reserve and by the Bangko Sentral ng Pilipinas (BSP).

The local unit closed at P56.815 versus the dollar on Friday, weakening by five centavos from Thursday’s P56.765 finish, data from the Bankers Association of the Philippines’ website showed.

Week on week, the peso likewise fell by 18.50 centavos from its P56.63 close on Sept. 8.

The local unit opened Friday’s session at P56.78 per dollar, which was also its intraday best. Its weakest showing was at P56.90 against the greenback.

Dollars traded rose to $1.06 billion on Friday from $1.17 billion on Thursday.

The peso weakened against the dollar on Friday “after mostly stronger US retail sales and US producer price index (PPI) data that could support the higher-for-longer Fed rates narrative,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“[The] US dollar strengthened against most currencies [on Friday] following resilient US economic data,” a trader added in a Viber message.

The dollar index surged to a six-month high on Thursday as economic data was mostly stronger than expected, hitting the 105.43 level earlier in the day, its highest since March 9.

The index was on track for its biggest one-day percentage gain in just over a week, Reuters reported.

Retail sales rose by 0.6% last month. Data for July was revised lower to show sales advancing 0.5% instead of the previously reported 0.7%. Economists polled by Reuters had forecast retail sales gaining 0.2%. Retail sales are mostly goods and are not adjusted for inflation. They rose 2.5% on a year-on-year basis.

Meanwhile, the producer price index (PPI) for final demand rose 0.7% last month, the largest gain since June 2022, the Labor department said on Thursday. Data for July was revised slightly to show the PPI advancing 0.4% instead of the previously reported 0.3%.

Higher global crude oil prices recently and losses at the local stock market also dragged down the peso, Mr. Ricafort added.

Brent crude futures rose by 23 cents or 0.3% to settle at $93.93 a barrel, while US West Texas Intermediate futures were up 61 cents or 0.7% to close at $90.77 a barrel. Both contracts traded at 10-month highs on Tuesday for the fifth consecutive session and gained about 4% on a weekly basis.

Meanwhile, the benchmark Philippine Stock Exchange index (PSEi) went down by 82.06 points or 1.32% to end at 6,126.34 on Friday, while the broader all shares index dipped by 33.13 points or 0.99% to close at 3,320.18.

The PSEi on Wednesday sank to the 6,100 level due to concerns about US inflation. This was its lowest level in 10 months or since October 2022.

For this week, Mr. Ricafort said the peso could trade sideways ahead of the rate-setting meetings by central banks.

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.

Meanwhile, the BSP extended its policy pause for a third straight time at its Aug. 17 meeting, keeping the benchmark interest rate at a near 16-year high of 6.25%.

The central bank has raised borrowing costs by 425 bps from May 2022 to March 2023 to tame inflation.

The Monetary Board will next meet on Sept. 21 to review policy.

The trader said the peso is likely to remain below the P57-per-dollar level due to a potential intervention from the BSP.

The trader sees the peso moving between P56.50 and P57 per dollar this week, while Mr. Ricafort sees it ranging from P56.50 to P56.95. — Aaron Michael C. Sy with Reuters

#Peso #trade #sideways #ahead #ratesetting #moves

Stocks may move sideways before US CPI data

PHILIPPINE SHARES are expected to move sideways this week before the release of US inflation data, which could affect the US Federal Reserve’s next move.

The Philippine Stock Exchange index (PSEi) gained 39.87 points or 0.64% to end at 6,222.94 on Friday, while the broader all shares index went up by 13.24 points or 0.39% to 3,360.23.

Week on week, the PSEi rose by 41.88 points or 0.68% from its close of 6,181.06 on Sept. 1.

For this week, analysts said the PSEi may move within a tight range ahead of the release of US consumer inflation data on Sept. 13.

“This week, we could see the index continue its rangebound pattern within the 6,150 to 6,350 area, with investors taking a more cautious stance ahead of the release of US August inflation data,” China Bank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message.

“A higher-than-expected rise in US consumer prices would be unwelcome news for equities market as it would pile pressure on the Federal Reserve to raise interest rates and prolong a hawkish monetary policy,” he added.

Faster US consumer inflation could affect trading activity, China Bank Securities Corp. Research Director Rastine Mackie D. Mercado likewise said in an e-mail on Friday.

“We may see muted buying appetite this week should the US inflation print come in faster than expected, and as investors adopt a cautious stance ahead of the Fed’s policy meeting on Sept. 19-20,” Mr. Mercado said.

The US consumer price index (CPI) rose 0.2% in July, matching June’s gain, Labor department data showed. On an annual basis, the CPI advanced by 3.2%.

US Federal Reserve Chair Jerome H. Powell said in the annual Jackson Hole Economic Policy Symposium last month that the central bank may need to raise interests further to cool still-too-high inflation, Reuters reported.

The Fed raised interest rates by 25 basis points (bps) in July, bringing its benchmark overnight rate to 5.25-5.5%.

The US central bank has hiked borrowing costs by a total of 525 bps since it started tightening cycle in March 2022.

Another trading driver for this week is the FTSE rebalancing on Friday, Sept. 15, Mr. Colet said.

“What investors are eagerly awaiting is a significant catalyst that can boost trading activity in the market. Nonetheless, we are closely watching the dollar’s resurgence, spurred by recent developments in the United States,” Globalinks Securities and Stocks, Inc. Senior Trader Mark V. Santarina said in a Viber message.

The US dollar index registered an eighth straight week of gains on Friday while global stock indexes ended slightly higher on the day ahead of key US inflation data this week, Reuters reported.

For this week, Mr. Mercado placed the PSEi’s support at 6,150. — S.J. Talavera with Reuters

#Stocks #move #sideways #CPI #data

Peso may trade sideways

THE PESO could trade sideways against the dollar this week ahead of the release of US inflation data that could affect the US Federal Reserve’s next policy move.

The local unit closed at P56.63 versus the dollar on Friday, strengthening by 16 centavos from Thursday’s P56.79 finish, data from the Bankers Association of the Philippines’ website showed.

Week on week, however, the peso inched down by 3.50 centavos from its P56.595 close on Aug. 30.

The local unit opened Friday’s session at P56.74 per dollar. Its weakest showing was at P56.785, while its intraday best was at P56.56 against the greenback.

Dollars traded rose to $1.62 billion on Friday from $1.45 billion on Thursday.

The peso appreciated on Friday following the dollar’s slight decline in Asian trading, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

For this week, the peso could move sideways against the dollar as the market awaits the release of August US consumer and producer inflation data, which could affect the Fed’s decision this month, Mr. Ricafort said.

The US central bank raised borrowing costs by 25 basis points (bps) last month, bringing its target rate to a range between 5.25% and 5.5%.

It has hiked rates by 525 bps since it began its tightening cycle in March last year.

The Federal Open Market Committee will hold its policy meeting on Sept. 19-20.

For this week, Mr. Ricafort expects the peso to range from P56.30 to P56.80 per dollar. — AMCS

#Peso #trade #sideways

Peso may move sideways before Aug. inflation data

Peso may move sideways before Aug. inflation data

THE PESO could trade sideways against the dollar this week ahead of the release of August inflation data.

The local unit closed at P56.595 versus the dollar on Thursday, strengthening by 13 centavos from Wednesday’s P56.725 finish, data from the Bankers Association of the Philippines’ website showed.

Week on week, however, the peso dropped by 2.50 centavos from its P56.57 per dollar finish on Aug. 25.

Trading was suspended on Friday as Malacañang suspended work in government offices due to inclement weather.

For this week, the peso could stay at the P56-per-dollar level ahead of the release of  the August consumer price index (CPI) report, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

A BusinessWorld poll of 18 analysts yielded a median estimate of 4.9% for August headline inflation, close to the lower end of the central bank’s 4.8% to 5.6% forecast for the month.

If realized, this would be faster than the 4.7% print in July, but lower than the 6.3% seen in August 2022.

It would mark the 17th straight month of inflation exceeding the Bangko Sentral ng Pilipinas’ (BSP) 2-4% target.

August inflation data will be released on Sept. 5, Tuesday.

Bets on the US Federal Reserve’s next move could also affect the peso’s movement, as this could be matched by the BSP, Mr. Ricafort added.

Financial markets are now betting the central bank is done raising rates and may start cutting them next year, according to CME Group’s FedWatch Tool, Reuters reported. Futures tied to the Fed’s policy rate show only a slight chance of a rate hike at the Sept. 19-20 meeting.

Since March 2022, the Fed has raised its policy rate by 525 basis points (bps) to the current 5.25%-5.5% range.

Meanwhile, the BSP kept its policy rate at a near 16-year high of 6.25% for a third straight meeting last month.

The BSP raised borrowing costs by 425 bps from May 2022 to March 2023 to tame inflation.

The Monetary Board will next meet on Sept. 21 to review policy.

Mr. Ricafort expects the peso to range from P56.30 to P56.80 per dollar this week. — AMCS with Reuters

#Peso #move #sideways #Aug #inflation #data

Stocks to move sideways before inflation report

PHILIPPINE STOCKS may move sideways this week ahead of the release of August inflation report and amid hopes that the US Federal Reserve is done hiking rates following soft US data that came out last week.

The Philippine Stock Exchange index (PSEi) inched up by 0.09 point or 5.81% to close at 6,181.06 on Friday, while the broader all shares index went up by 0.21 point or 7.19% to 3,341.97.

Week on week, the PSEi also gained 20.45 points or 0.33% from its close of 6,160.61 on Aug. 25.

For this week, trading will be driven by economic data, analysts said.

“This week’s market direction will be shaped by investors’ reaction to the latest US jobs report, China’s efforts to prop up its economy, and the Philippine August inflation print,” China Bank Securities Corp. Research Director Rastine Mackie D. Mercado said in an e-mail.

The market’s movement will be affected by US and local data releases, China Bank Capital Corp. Managing Director Juan Paolo E. Colet likewise said in a Viber message.

“Domestic inflation data for August will be top of mind for most investors. The expectation is that this will be higher than July’s 4.7%, but a steep jump could introduce fresh volatility to the market,” Mr. Colet said.

US job growth picked up in August, but the unemployment rate jumped to 3.8% and wage gains moderated, suggesting that labor market conditions were easing and cementing expectations that the Federal Reserve will not raise interest rates this month, Reuters reported.

The economy created 110,000 fewer jobs than previously reported in June and July, which some economists said suggested there had been business closures that were not previously captured.

The labor market is slowing in response to the US central bank’s hefty rate hikes to cool demand in the economy.

Meanwhile, a BusinessWorld poll of 18 analysts yielded a median estimate of 4.9% for August Philippine headline inflation, close to the lower end of the central bank’s 4.8% to 5.6% forecast for the month.

If realized, this would be faster than the 4.7% print in July, but lower than the 6.3% seen in August 2022.

It would mark the 17th straight month of inflation exceeding the Bangko Sentral ng Pilipinas’ 2-4% target for the year.

August inflation data will be released on Sept. 5, Tuesday.

“We also see the index possibly retesting the 6,150 support level after last week’s oversold rally fizzled out. A successful retest of a support level is an important indicator that the recent downtrend could be reaching a trough,” Mr. Mercado said.

For this week, Mr. Mercado placed the PSEi’s support at 6,150 and resistance at 6,370-6,420, while Mr. Colet put support at 6,150 and resistance at 6,350. — S.J. Talavera with Reuters

#Stocks #move #sideways #inflation #report