Peso Firms Amid Continued Assessment Of Rate Outlook

Spot USD/PHP trades -0.106 at PHP56.309, with bears setting their sights on Jun 29 low of PHP54.600. On the flip side, bulls look for a rally towards all-time highs at PHP56.500.

• USD/PHP 1-month NDF last -0.020 at PHP56.490. Downside focus falls on Jun 28 low of PHP54.740, while bulls keep an eye on historic highs at PHP56.740.
• The jury is out on possible scenarios for the BSP's August monetary policy meeting. Six out of 10 economists surveyed by Bloomberg said they expect a 50bp hike to the benchmark policy rate. Three analysts forecast a 25bp rate rise and one sees a 75bp move.
• Market pricing points to the key policy rate reaching nearly 3.9% in three months' time, per BBG MIPR tool. This implies that a cumulative 75bp worth of rate increases at the BSP's meetings in August and September is seen as the most likely scenario.
• Recall that Bangko Sentral delivered an out-of-cycle 75bp rate hike last week, while Governor Medalla suggested that the odds of a 50bp move in August have been reduced as a result.
• On a different front, the Philippines' main COVID-19 panel will review its alert levels today.