Peso Hit By Double Whammy Of GDP Growth Slowdown & Wider Trade Deficit

Spot USD/PHP has crept higher as weak domestic data has undermined the peso. The rate last sits +0.030 at PHP55.573, with bulls looking for gains past Jul 28 high of PHP55.975 towards record highs at PHP56.500. Bears keep an eye on Jul 29 low/50-DMA at PHP55.057/54.892.

• USD/PHP 1-month NDF last +0.210 at PHP55.720. Topside focus falls on Jul 28 high of PHP56.060, followed by the all-time high of PHP56.740. Bears look for a dip through the 50-DMA, which intersects at PHP55.033.
• The PSEi has faltered this morning and last sits ~0.3% lower on the day, hovering just above resistance-turned-support from its 50-DMA.
• The Philippines economy registered a surprise quarterly contraction in Q2, shrinking 0.1% Q/Q versus BBG median estimate of a 0.4% expansion. Annual growth printed at +7.4% Y/Y, undershooting consensus forecast of +8.4%.
• The trade deficit widened to $5.843bn in June versus BBG median estimate of $5.427bn. Exports growth missed expectations, while imports rose more than forecast.
• National Economic and Development Authority (NEDA) chief Balisacan insisted that economic recovery remains strong and Q2 GDP performance was in line with the target for this FY. He noted that inflation contributed to the slowdown in growth, adding that H2 growth may not be as fast as in H1. Balisacan also warned that the trade gap will likely keep widening.