Peso to move sideways before key data releases

THE PESO could trade sideways against the dollar this week as players await the release of Philippine and US economic data.

On Friday, the local unit closed at P59.065 per dollar, declining by 7.5 centavos from its P58.99 finish on Thursday, data from the Bankers Association of the Philippines showed.

Week on week, the peso dropped by 13 centavos from its P58.935 close on Dec. 5.

“The dollar-peso closed higher after Remolona tempered the market’s hawkish view due to weak growth expectations,” a trader said in a phone interview.

BSP Governor Eli M. Remolona, Jr. said on Friday that the central bank has room for one last 25-basis-point (bp) cut next year as the inflation outlook remains benign and with the economy’s recovery likely to take longer than expected.

He said gross domestic product (GDP) growth could slow further to 3.8% this quarter from the over four-year low of 4% in the July-September period. This would bring the full-year average below 5% versus the government’s 5.5-6.5% goal.

The BSP chief said that they expect the economy to recover by the second half of 2026, with growth seen moving closer to the government’s 6-7% target only by 2027.

On Thursday, Mr. Remolona signaled that their current easing cycle is nearing its end after the Monetary Board lowered benchmark rates by 25 bps for a fifth meeting in a row to bring the policy rate to 4.5%, as expected by 17 out of 18 analysts in a BusinessWorld poll.

The Philippine central bank has now delivered 200 bps in reductions since starting its easing cycle in August 2024.

For this week, the trader said the peso could move depending on the Philippine remittances and US nonfarm payrolls data to be released in the coming days.

The trader expects the peso to move between P58.80 and P59.20 per dollar, while Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said he sees it ranging from P58.70 to P59.20.

A host of delayed employment, inflation and other data in the coming week will give a long-anticipated view of the US economy that could help guide markets into year-end, Reuters reported.

The upcoming data are especially critical because investors and the Federal Reserve have been navigating with little certainty since a 43-day federal government shutdown postponed key reports.

The US jobs report for November is due on Tuesday, while the monthly consumer price index, which is closely watched for inflation trends, is out on Thursday.

US payrolls are expected to have climbed by a tepid 35,000 in November, according to a Reuters poll. Fed Chair Jerome H. Powell on Wednesday said while payrolls have been averaging an increase of 40,000 per month since April, the Fed thinks those numbers are overstated and could instead be an average loss of 20,000 per month.

A divided Fed cut interest rates by a quarter percentage point on Wednesday for a third-straight meeting as it seeks to shore up a weakening labor market. But the central bank signaled borrowing costs are unlikely to drop further in the near term as it awaits more economic clarity. — AMCS with Reuters