THE PESO will likely move sideways against the dollar this week due to escalating geopolitical tensions abroad amid upbeat economic developments in the US.
Last Friday, the peso strengthened against the greenback, ending the session at P51.95 following US President Donald J. Trump’s tweet on retaliatory actions following the suspected chemical attack in Syria.
Week on week, the peso also strengthened from its P52.02-per-dollar finish last April 6.
Guian Angelo S. Dumalagan, market economist at Land Bank of the Philippines (LANDBANK) said the dollar might move sideways this week “as escalating geopolitical issues abroad could reduce the dollar’s appeal.”
On Friday (Manila time), American, British and French forces struck Syria with more than 100 missiles, targeting chemical weapons facilities in retaliation against a suspected gas poison attack.
Mr. Trump announced the military strike from the White House, saying that Washington, UK and France “marshalled their righteous power against barbarism and brutality.”
Russia promised to respond to any attack on its ally, adding that the Syrian military had intercepted 71 of the missiles fired.
Emilio S. Neri, Jr., lead economist at Bank of the Philippine Islands, said on the sidelines of the Economic Journalists’ Association of the Philippines’ media seminar in Tagaytay City that the developments in the Middle East “will elevate the price of oil.”
“This negative development could weigh down the greenback [today],” Mr. Dumalagan added, even as expectations of four interest rate hikes in the US escalated after Boston Federal Reserve President Eric S. Rosengren suggested that the monetary authority could end up hiking its rates more than three times this year in response to the robust economy.
For the rest of the week, Mr. Dumalagan noted that the dollar may regain strength due to upbeat US economic data and expected hawkish speeches from Fed officials in the coming days.
Fed officials such as Raphael Bostic, William Dudley and Charles Evans are expected to address the public this week.
Their remarks, along with likely strong US economic data, could bolster US rate hike expectations and sustain the hawkish takeaways from Mr. Rosengren’s speech last week.
LANDBANK’s market economist said the remarks, along with likely strong reports on retail sales, housing, and initial jobless claims, could bolster expectations of more Fed rate hikes.
Meanwhile, Mr. Neri added that remittances data to be released by the local central bank today could strengthen the peso.
“We’re looking at the remittances. If that outperforms the expectations, because usually it’s around $2-2.5 billion, that will be supportive of the peso,” he said.
For this week, LANDBANK’s Mr. Dumalagan sees the peso moving between P51.60 and P52.30 versus the dollar, while a trader said on Friday that it is still unclear where the next direction will be.
“We’re still looking for directions. If we break the P51.90 to P51.95 support level, we may see dollar-peso trade [stronger],” the trader noted. — Karl Angelo N. Vidal