Peso strengthens as US data weighs on dollar

The peso gained over the US dollar for the second consecutive trading day on Thursday, as the dollar softened after weak economic data failed to impress investors.

The local currency gained 11 centavos to close at P46.530:$1 from 46.640 Wednesday.

"Dollar pulled back on Thursday with risk currencies stronger as US economic data reported overnight failed to print impressively higher," Nicholas Antonio Mapa, associate economist at the Bank of the Philippine Islands (BPI), told GMA News Online.

Mapa was referring to the US manufacturing sector which noted an index of 51.3 in May from 50.8 in April, according to data from the Institute for Supply Management.

However, while data showed that US manufacturing activity expanded, growth in new orders continued to slow, Reuters said in a report.

"Data was notably better than expected but failed to be convincing enough to push the chances for a Fed rate hike in June. Investors look to data from the United States later tonight on the labor front and the OPEC meeting for direction," Mapa said.

The US is scheduled to release its non-farm payrolls data on Friday, while the Organization of the Petroleum Exporting Countries is scheduled to meet on Thursday.

Both developments are expected to influence the decision of the Federal Open Market Committee whether or not to raise interest rates, which in turn will impact on the peso-dollar exchange rate. – VDS, GMA News