Peso hits one-month high before key US data

THE PESO jumped to a near one-month high against the dollar on Wednesday as players positioned before the release of US inflation data overnight and as the situation in the Middle East remains volatile.

The currency rose by 15 centavos to close at P61.395 versus the greenback from its P61.545 finish on Tuesday, based on Bankers Association of the Philippines data posted on its website.

This was the peso’s strongest close since May 13’s P61.38.

The local unit opened Wednesday’s session slightly stronger than Tuesday’s close at P61.50 per dollar. It rose to as high as P61.39, while its intraday low was at P61.58 against the greenback.

Dollars traded rose to $1.69 billion on Wednesday from $1.46 billion on Tuesday.

“The dollar-peso closed lower as players trimmed their positions ahead of a potential surprise in US inflation data overnight,” a trader said in a phone interview.

The peso was supported by a generally weaker dollar on Wednesday as markets turned cautious over the fast-evolving situation in the Middle East, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Better foreign direct investments (FDI) data for March also boosted the local unit, Mr. Ricafort added.

FDI net inflows reached $611 million in March, up from $485 million a year earlier, preliminary Bangko Sentral ng Pilipinas (BSP) data showed. This was the first time since December last year that FDI net inflows grew year on year.

However, the March tally reflected a 4.23% decline from the revised $638 million in net inflows in February.   

For Thursday, the trader sees the peso moving between P61.30 and P61.60 per dollar, while Mr. Ricafort expects it to range from P61.30 and P61.55.

The dollar held steady on Wednesday as markets remained on edge over the latest clash between the US and Iran while awaiting closely watched US inflation data that could provide clues on the Federal Reserve’s interest rate path, Reuters reported.

The US military struck Iranian targets after President Donald J. Trump vowed on Tuesday to respond to the downing of an Apache attack helicopter, a fresh escalation that threatens to unravel a fragile ceasefire between Washington and Tehran.

Iran’s Revolutionary Guards said they had carried out missile and drone attacks on US military bases in Jordan, Kuwait and Bahrain on Wednesday in retaliation for American strikes on Iranian targets around the Strait of Hormuz.

The dollar index, which measures the greenback against a basket of currencies including the yen and euro, was last a touch lower at 99.88.

Later on Wednesday, the US was set to release consumer price index data for May, which is seen as crucial in gauging whether the Fed might hike rates later this year following last week’s stronger-than-expected jobs report. — Aaron Michael C. Sy with Reuters