Peso climbs to fresh two-week high on Fed bets

THE PESO on Thursday jumped to its strongest close against the dollar in over two weeks as US jobs data supported further rate cuts.

The local unit closed at P58.555 per dollar, rising by 17 centavos from its P58.725 finish on Wednesday, data from the Bankers Association of the Philippines showed.

This was the peso’s best finish in over two weeks or since it closed at P58.521 per dollar on Dec. 2.

The local currency opened Thursday’s session slightly stronger at P58.70 against the dollar. It hit an intraday high of P58.49, while its worst showing was at P58.72 against the greenback.

Dollars exchanged jumped to $1.65 billion from $1.34 billion on Wednesday.

“The peso appreciated after the latest US labor reports solidified the dovish case for further US rate cuts,” a trader said in a Viber message.

The US Labor department reported a nonfarm payroll increase of 64,000 jobs last month and that the unemployment rate rose to 4.6%, Reuters reported. November represented a bounce-back from October’s 105,000 jobs decline, which included the departure of more than 150,000 federal employees who took deferred buyouts as part of the Trump administration’s push to shrink the government’s footprint.

However, the clouding of the data from the 43-day US government shutdown through October and into mid-November created some uncertainty about what the report really means for the economy and the Federal Reserve’s outlook for interest rate policy after its 25-basis-point cut last week.

While relatively low wage growth and anemic November job creation provided hope for more Fed rate cuts, David Wagner, portfolio manager at Aptus Capital Advisors, said the return to job increases in November could also support more hawkish views that rates should hold steady.

While the Fed’s estimate last week was for one rate cut for 2026, traders have been betting on two or more cuts, according to CME Group’s FedWatch tool.

While bets were little changed after Tuesday’s data, Adam Rich, deputy CIO and portfolio manager at Vaughan Nelson, said that the stock market’s decline suggests concern about the interest rate outlook.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort attributed the peso’s strength to increased remittance inflows before the holidays.

The trader noted that the release of the latest US inflation data could drag the peso lower again on Friday.

The trader expects the peso to range from P58.45 to P58.70 per dollar, while Mr. Ricafort sees the peso moving between P58.40 and P58.65. — Katherine K. Chan with Reuters