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THE PESO inched up against the dollar on Tuesday before the US Federal Reserve’s two-day policy meeting, which was scheduled to start overnight.

The local unit closed at P57.295 per dollar on Tuesday, strengthening by half a centavo from its P57.30 finish on Monday, Bankers Association of the Philippines data showed.

The peso opened Tuesday’s session stronger at P57.21 against the dollar. Its worst showing was at P57.36, while its intraday best was at P57.20 versus the greenback.

Dollars exchanged rose to $1.11 billion from $1.02 billion on Monday.

“The dollar-peso initially traded lower on softer-than-expected US retail sales and manufacturing data, but bounced back to trade at a tight range on market caution ahead of the Fed meeting,” a trader said in a phone interview

The weaker data supported bets that the Fed could resume its easing cycle within the year, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

For Wednesday, the trader expects the peso to move between P57 and P57.50 per dollar, while Mr. Ricafort sees it ranging from P57.20 to P57.40.

“The local currency might continue to gain ground [on Wednesday] on likely softer US housing data overnight,” a second trader said, forecasting a range of P57.15 to P57.40.

US retail sales rebounded marginally in February as consumers pulled back on discretionary spending, reinforcing the growing uncertainty over the economy against the backdrop of tariffs and mass firings of federal government workers, Reuters reported.

Nonetheless, the report from the Commerce department on Monday suggested that the economy continued to grow in the first quarter, though at a moderate pace.

Retail sales rose 0.2% last month after a downwardly revised 1.2% decline in January, which was the biggest drop since November 2022, 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, advancing 0.6% after a previously reported 0.9% drop in January.

That decline followed hefty gains in the fourth quarter and winter storms in many parts of the country in January as well as wildfires in California.

US President Donald J. Trump’s raft of tariffs, which have unleashed a trade war, has ignited worries about inflation as well as job and income losses, developments that could undercut consumer spending. Mass layoffs of public workers as part of an unprecedented campaign by the Trump administration to shrink the federal government are also seen hurting spending.

Federal Reserve officials meeting on Tuesday and Wednesday are expected to leave the US central bank’s benchmark overnight interest rate in the 4.25%-4.5% range, having reduced it by 100 basis points since September, and continue to assess the economic impact of the Trump administration’s policies.

Financial markets expect the Fed to resume cutting borrowing costs in June after it paused its easing cycle in January amid a darkening economic outlook.

The dollar index, which measures the currency against six key rivals, has dropped around 6% from the more than two-year peak of 110.17 hit in mid-January. It was last up 0.13% at 103.59. — A.M.C. Sy with Reuters