The Philippine peso depreciated against the dollar on Wednesday as market participants took positions ahead of key US economic releases that could influence the US Federal Reserve's policy stance.

The local currency shed 7.5 centavos to close at P62.64 against the greenback from its P62.565 finish on Tuesday, data from the Bankers Association of the Philippines' website showed.

The peso opened Wednesday's session slightly stronger at P62.50 per dollar, which also stood as its intraday high, while its weakest showing was P62.67. Dollar turnover declined to $1.426 billion from $1.484 billion in the prior session. The peso's level feeds through to the peso cost of dollar-priced imports and the peso value of dollar earnings such as overseas remittances.

"The dollar-peso closed a bit higher, but traded mostly sideways on cautious positioning ahead of key US data releases this week," a trader said in a phone interview, referring to upcoming labor data.

The greenback likewise drew support from US Treasury yields reaching new highs, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message. Elevated US yields raise the returns on dollar-denominated assets, reinforcing demand for the greenback.

For Thursday, the trader expects the peso to move between P62.40 and P62.80 against the dollar, while Mr. Ricafort sees it ranging from P62.50 to P62.75.

Dollar Near Yearly High Versus Euro

The dollar hovered near its highest level of the year against the euro on Wednesday and was on track for its biggest monthly gain versus the single currency in 14 months, buoyed by stronger US growth and rising interest rate expectations, Reuters reported.

The euro has been among the worst-performing G10 currencies — a group of major globally traded currencies — this year, pressured by Europe's energy and debt worries. The dollar has gained nearly 2.3% against the euro in September, putting it on course for a third consecutive quarterly advance.

A run of data pointing to a resilient US economy and persistent inflation prompted the Federal Reserve to raise interest rates earlier this month for the first time in three years. Traders have since priced in a more aggressive path for US monetary policy relative to the euro zone, where growth remains weaker and debt concerns are mounting.

Some of that hawkish Fed pricing eased on Wednesday, however, after New York Fed President John Williams, a permanent voting member of the Fed's rate-setting Federal Open Market Committee, said there was "no need for urgency" in raising rates.

The euro edged up to $1.135 but remained close to the May 2025 low touched in the previous session. It was also testing support near ¥178.

Traders have cut expectations for a 25-basis-point Fed rate increase this month to about 44%, from around 70% earlier this week, according to CME Group's FedWatch tool, which tracks market-implied odds of Fed rate moves.

The dollar has strengthened against most major currencies in September, supported by Treasury yields that have climbed to multi-year highs — Aaron Michael C. Sy with Reuters

Source: BusinessWorld