Peso Loses Ground After Philippines Step Up Virus Containment Measures

The Philippine peso is the worst performer in the Asia EM basket as we type after the authorities took measures to contain the spread of the Omicron variant.

• The nation's Covid-19 task force raised the Alert Level to 3 in 14 areas (5 provinces and 9 cities), tightening restrictions in targeted localities from Sunday. Pres Duterte warned that unvaccinated people who ignore the stay-at-home order will face arrest, as daily cases hit a three-month high on Thursday. Nonetheless, Defence Sec Lorenzana brushed away speculation that the government was planning to impose martial law.
• Meanwhile, the unemployment rate fell to 6.5% in November from 7.4% recorded in October, while the participation rate rose to 64.2% from 62.6%, according to data released today. The release has been overshadowed by Covid-19 developments, which render the report somewhat outdated.
• Spot USD/PHP last trades +0.080 at PHP51.260. Bulls look to a break above Jan 5 high of PHP51.300, which would clear the way to Mar 18, 2020 peak at PHP51.823 On the flip side, a fall through Jan 5 low of PHP50.900 would open up the 50-/100-DMAs at PHP50.428/50.410.
• USD/PHP 1-month NDF last +0.120 at PHP51.650. Topside focus falls on Jan 4 high of PHP52.140, while on the downside Dec 31 low of PHP51.090 provides the initial target.
• Data-wise, focus turns to the Philippines' trade balance, due Tuesday.