The Philippine peso is likely to trade in a narrow range against the US dollar this week, as market participants turn their attention to key inflation reports out of the United States, with renewed tensions in the Middle East also expected to influence sentiment.

The local currency strengthened by 9.9 centavos to close at P62.801 per dollar on Friday, recovering from its record-low finish of P62.90 on Thursday, according to data from the Bankers Association of the Philippines'. The exchange rate matters well beyond the trading floor, since the peso's level feeds into the local cost of dollar-priced goods, from fuel to other imports, for households and businesses.

Despite the Friday rebound, the peso weakened by 26.6 centavos week on week from its P62.535 close on Oct. 2.

The peso ended the week stronger after touching an intraday high of P62.735 on Friday, following remarks by US President Donald J. Trump that the United States would not attack Iran before the midterm elections, a trader said by telephone.

The currency was also supported by reports of a stronger oil supply following Mr. Trump's signals, which likewise drove global crude prices lower early on Friday, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message. He added that lower US Treasury yields caused the dollar to weaken broadly. Oil is a recurring variable for the peso because the Philippines sources its fuel from international markets, where it is priced in dollars.

Looking ahead, the trader identified the US consumer price index for September as a major catalyst for the foreign exchange market this week, noting that it could influence the US Federal Reserve's policy decision this month. Mr. Ricafort said trading will be guided by the release of US producer inflation data, as well as developments in the Middle East. US inflation prints carry weight for emerging-market currencies such as the peso because they shape expectations for Federal Reserve policy, which in turn helps set the dollar's broader direction.

The trader expects the peso to range from P62.50 to P62.90 against the greenback this week, while Mr. Ricafort sees it moving between P62.60 and P62.95.

World stocks rose on Friday, with government bond yields and oil prices edging only incrementally higher, ahead of this week's key economic data and quarterly earnings reports from the largest US banks, Reuters reported.

Crude prices finished marginally higher, even after Mr. Trump said Russia had agreed to immediately supply more than 300,000 tons of diesel to the US and global marketplace. Diesel prices in the US are off their records but remain well above $6 a gallon. Front-month West Texas Intermediate oil and Brent crude both settled up 0.4%, with Brent at about $104 a barrel.

All three major US stock indexes advanced, logging weekly gains, with the S&P 500 and the technology-heavy Nasdaq Composite both rising about 0.6%.

US Treasuries fell on Friday, reversing some of the gains from earlier in the week, as investors looked to upcoming inflation reports for clues on what the Federal Reserve will do at its Oct. 27-28 policy meeting. The benchmark 10-year yield rose 2.8 basis points to 5.261% after hitting a 24-year high earlier last week. On the week, however, 10-year yields declined 3.5 basis points, the largest weekly drop in two months.

In Europe, government borrowing costs were broadly lower after a sharp sell-off driven most recently by worries over high inflation and France's fiscal outlook.

A combination of higher energy costs, expectations of further central bank interest-rate hikes, and concerns about rising government debt has fueled a months-long global bond sell-off, pushing borrowing costs higher.

— Aaron Michael C. Sy, with Reuters

Source: BusinessWorld Online