Peso retreats as US economic data buoys dollar

The Philippine peso opened the week on a soft note against the US dollar which was supported by the recent release of stronger-than-expected economic data.

The local currency closed Monday at P51.51:$1, or 6 centavos weaker than Friday’s P51.45.

“The peso depreciated today following the release of stronger-than-expected US non-farm payrolls data and steady US unemployment rate last Friday,” Guian Angelo Dumalagan, market economist at Land Bank of the Philippines, said.

American nonfarm payrolls increased by 200,000 in January after rising by 160,000 in December while the US unemployment rate was unchanged at 4.1 percent, Reuters reported.

“Also contributing to the strength of the dollar is the increasing bets of the faster pace of interest rate hikes from the US Federal Reserve,” Dumalagan said.

The US futures market is now pricing in the risk of three or even more rate hikes from the Federal Reserve this year.

Dumalagan said the market will closely monitor the release of Philippine inflation numbers to be released on Tuesday, which may influence how the Bangko Sentral ng Pilipinas (BSP) policy will take shape.

“The inflation report of the country could also be a market-mover, as a sharp rise in inflation could fuel expectations of a more hawkish BSP policy meeting on Thursday,” he said. —Jon Viktor Cabuenas/VDS, GMA News