THE PESO could strengthen against the dollar this week following positive US data released over the trading break.
The local unit closed at P56.80 per dollar on Wednesday, weakening by three centavos from its P56.77 finish on Tuesday, Bankers Association of the Philippines data showed.
Week on week, however, the peso strengthened by 17 centavos from its P56.97-per-dollar close on April 11.
Philippine financial markets were closed on April 17-18 in observance of Maundy Thursday and Good Friday.
A trader said the peso’s movement this week will depend on the data released over the long weekend.
“If US retail sales come in higher, we expect further recovery to test the P56.50 level. Should the data show some weakness, the peso could depreciate to P56.70,” the trader said.
For his part, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the peso could range from P56.50 to P57 versus the dollar this week.
The dollar ticked up on Thursday as investors took some heart from trade talks between the United States, Japan and Italy, though the positive mood was curbed by US Federal Reserve Chair Jerome H. Powell saying the US central bank would be cautious about cutting interest rates, Reuters reported.
The dollar has been a major casualty of the turmoil stemming from tariffs and their impact on economic growth. Against a basket of six other currencies, the dollar has fallen to its lowest in three years this month, but it was slightly firmer on Thursday.
US retail sales increased by the most in more than two years in March as households stepped up purchases of motor vehicles and a range of other goods to avoid higher prices from tariffs, likely barely keeping the economy afloat in the first quarter.
With the stock market selling off and consumer sentiment tanking amid a darkening economic outlook wrought by President Donald J. Trump’s constantly changing tariff policy, the robust sales pace reported by the Commerce department on Wednesday will probably fizzle in the months ahead as consumers hunker down.
Retail sales increased 1.4% last month, the largest gain since January 2023, after an unrevised 0.2% rise in February, the Commerce department’s Census Bureau said. Economists polled by Reuters had forecast retail sales, which are mostly goods and are not adjusted for inflation, accelerating 1.3%.
Consumer sentiment is near three-year lows, with 12-month inflation expectations the highest since 1981. Mass layoffs of public workers as part of an unprecedented campaign by the Trump administration to downsize the federal government are also weighing on morale and could be a potential drag on spending.
Economists said the current economic environment could spur precautionary saving, potentially undercutting spending.
Meanwhile, the number of Americans filing new applications for unemployment benefits fell to a two-month low in the week ended April 12, suggesting labor market conditions remained stable in April, though uncertainty around tariffs is making businesses hesitant to boost hiring.
Initial claims for state unemployment benefits dropped 9,000 to a seasonally adjusted 215,000 for the week ended April 12, the lowest level since February, the Labor department said.
Economists polled by Reuters had forecast 225,000 claims for the latest week. There are still no signs mass firings of federal government workers have significantly impacted the labor market.
The data suggested companies had not yet responded with layoffs to Mr. Trump’s April 2 “Liberation Day” tariff announcement, but the White House’s trade policy has constantly shifted, which economists said made it difficult for businesses to plan ahead.
Mr. Trump has slapped duties on virtually all foreign goods, igniting a trade war with China, the biggest source of US imports. The hit from tariffs, together with the drag from tightening financial conditions, could still come. — AMCS with Reuters
