NDFs Ease Off Weekly Highs

Onshore Philippine markets are closed for Eid Al-fitr today, but USD/PHP 1-month NDF last trades -0.060 at PHP48.030, despite printing a fresh weekly high at PHP48.130 earlier in the session. Losses come on the back of the dissipation of overnight USD strength, with the DXY ebbing off Wednesday's peak.

• From a technical perspective, bears look for a break under Feb 2/May 10 lows of PHP47.840, worst levels since 2016. On the flip side, should 1-month NDF jump above May 5 high of PHP48.260, bulls could take aim at the 100-DMA at PHP48.410.
• Bangko Sentral ng Pipilinas left interest rates on hold Wednesday, in line with our expectations and as forecast by almost all analysts. BSP said that "inflation is now projected to track a slightly lower path in 2021," "as price pressures on food commodities are abating with improved weather conditions, the impact of Executive Orders No. 128 and 133, s. 2021, and the implementation of direct non-monetary interventions to alleviate supply constraints." Specifically, this year's inflation forecast was lowered to +3.9% Y/Y from +4.2%, which means that CPI is now expected to return into the target range by the year-end. Unsurprisingly, the Monetary Board judged that "on balance, the expected path of inflation and downside risks to domestic economic growth warrant keeping monetary policy settings steady."