Peso On Softer Footing As BSP Signals Potential Pivot To More Gradual Approach

The Philippine peso has been offered amid weakness in the broader Asia EM FX space and an apparent moderation in Bangko Sentral ng Pilipinas' rate-hike plans.

• Spot USD/PHP deals +0.135 at PHP56.080, with bulls looking for a move towards record highs of PHP56.500. Bears keep an eye on the 50-DMA, which intersects at PHP55.412.
• USD/PHP 1-month NDF last +0.130 at PHP56.210. Bulls look to record highs at PHP56.740 for a firm layer of resistance. Bears look for a dip through PHP55.536, the 50-DMA.
• The PSEi has retreated this morning and currently trades ~1.3% lower on the day. The index's rally has run out of steam ahead of its 200-DMA (6,921).
• Worth recapping Friday's comments from BSP Gov Medalla, who suggested that rate hikes delivered to date have been successful in containing inflation and may turn more gradual from here. Medalla noted that the BSP will likely deliver one or two 25bp hikes at the remaining three monetary policy meetings this year.
• Also on Friday, data showed that the Philippines' BoP deficit widened to $1.819bn in Jul from $1.574bn prior.
• Philippine budget balance for the month of Jul will hit the wires later today.
• House Speaker Romualdez said parliament is set to receive the proposed PHP5.268tn 2023 spending plan today. House leaders are planning to complete committee and plenary deliberations by the Oct 1 recess.