THE PESO might appreciate against the dollar this week following favorable US economic statistics published during the trading hiatus.
The local currency concluded at P56.80 per dollar on Wednesday, dipping by three centavos from its P56.77 close on Tuesday, according to data from the Bankers Association of the Philippines.
On a weekly basis, however, the peso gained 17 centavos compared to its P56.97-per-dollar closing on April 11.
Philippine financial markets were inactive on April 17-18 in commemoration of Maundy Thursday and Good Friday.
A trader indicated that the peso’s trajectory this week will hinge on the figures announced over the extended weekend.
“If US retail sales exceed expectations, we anticipate further recovery to challenge the P56.50 threshold. Conversely, if the data reflects some weakness, the peso may depreciate to P56.70,” the trader remarked.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort added that the peso could fluctuate between P56.50 to P57 against the dollar this week.
The dollar rose slightly on Thursday as investors found some encouragement from trade discussions between the United States, Japan, and Italy, although the positive sentiment was tempered by comments from US Federal Reserve Chair Jerome H. Powell indicating that the US central bank would approach interest rate cuts with caution, Reuters reported.
The dollar has suffered significantly due to the upheaval arising from tariffs and their influence on economic progression. Compared to a basket of six other currencies, the dollar has dropped to its lowest in three years this month, yet it remained somewhat stronger on Thursday.
US retail sales saw their largest increase in over two years in March as households intensified purchases of automobiles and various other products to evade increased costs from tariffs, likely providing minimal support to the economy during the first quarter.
With the stock market declining and consumer confidence plummeting amid a grim economic forecast due to President Donald J. Trump’s frequently altering tariff strategy, the vigorous sales pace reported by the Commerce Department on Wednesday is expected to diminish in the upcoming months as consumers become more cautious.
Retail sales jumped 1.4% last month, marking the most significant rise since January 2023, following an unrevised 0.2% increase in February, as reported by the Commerce Department’s Census Bureau. Economists surveyed by Reuters had predicted that retail sales, primarily encompassing goods and not adjusted for inflation, would accelerate by 1.3%.
Consumer sentiment is hovering near three-year lows, with inflation expectations for the next year at their highest since 1981. Mass layoffs of public employees due to an unprecedented initiative by the Trump administration to downsize the federal workforce are also impacting morale and could potentially hinder spending.
Economists noted that the current economic landscape could trigger precautionary saving, which might undermine consumer spending.
Meanwhile, the number of Americans submitting new claims for unemployment benefits dropped to a two-month low in the week ending April 12, indicating stable labor market conditions in April, although uncertainties surrounding tariffs are making businesses reluctant to increase hiring.
Initial claims for state unemployment benefits decreased by 9,000 to a seasonally adjusted 215,000 for the week ending April 12, the smallest figure since February, according to the Labor Department.
Economists surveyed by Reuters had anticipated 225,000 claims for the most recent week. There are still no indications that mass layoffs of federal government employees have had a substantial impact on the labor market.
The data indicated that companies had not yet reacted with layoffs to Mr. Trump’s April 2 “Liberation Day” tariff announcement, but the White House’s trade policy has been in constant flux, which economists believe complicates planning for businesses.
Mr. Trump has enforced tariffs on nearly all foreign goods, igniting a trade conflict with China, the largest source of US imports. The ramifications from tariffs, combined with the constraints from tightening financial conditions, may still unfold. — AMCS with Reuters
