The peso rises as the market focuses on the US consumer inflation report

The PESO rose sharply against the dollar on Wednesday as the market awaited the release of the December US Consumer Price Index (CPI) data, which is likely to concerns the US Federal Reserve’s policy reduction cycle.

The local unit closed at P58.575 per dollar on Wednesday, up 4.5 centavos from its close of P58.62 on Tuesday, data from the Bankers Association of the Philippines said.

The peso opened Wednesday’s session slightly weaker at P58.65 against the dollar. Its best intraday was its closing level of P58.575, while its worst showing was at P58.70 against the greenback.

Dollars traded fell to $1.37 billion on Wednesday from $1.42 billion on Tuesday.

The peso traded higher against the dollar on Wednesday as the market was cautious ahead of the release of December US CPI data overnight, a trader said by telephone.

The dollar weakened again following the report that the tariffs planned by the administration of US President Donald J. Trump may be gradually implemented, said the Chief Economist of Rizal Commercial Banking Corp. Michael L. Ricafort in a Viber message.

On Thursday, the trader sees the peso moving between P58.50 and P58.80 per dollar, while Mr. Ricafort expects it to go from P58.45 to P58.65.

The dollar’s major rally hit a high on Wednesday as traders remained cautious ahead of a much-anticipated US inflation report due later, Reuters reported.

The main market event on Wednesday will be the reading of US inflation, where investors predict a 0.2% increase in the basic prices of the consumer every month of December. Any surprise could reduce the extent of the Federal Reserve’s rate cuts this year.

The greenback settled in the Asian session after falling overnight and pulling away from a more than two-year high earlier in the week. The dollar index was last 0.03% lower at 109.17.

The dollar’s decline on Tuesday came in part due to a negative reading on US producer prices, which pulled Treasury yields from their highs. – AMC Sy with Reuters