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Peso Outperforms On Rate Dynamics, Bolstered By Thursday's PSEi Rebound

PHP

Spot USD/PHP has taken a dip in early dealing and last changes hands -0.415 at PHP55.420, with focus on U.S./Philippine monetary policy dynamics. If the rate sinks past Jul 26 low of PHP55.315, bears would set their sights on Jun 29 low/50-DMA at PHP54.600/54.457. Bulls keep an eye on the PHP56.500 ATH.

  • USD/PHP 1-month NDF last seen -0.350 at PHP55.560. Downside focus falls on Jul 26 low of PHP55.420, a break here would expose Jun 28 low/50-DMA at PHP54.740/54.590. Bulls would be pleased by a bounce towards record highs at PHP56.740.
  • Philippine equities outperformed in Asia on Thursday, with the benchmark PSEi Index up 2.3% at 6,379 come the closing bell, with the market showing broad, cross-sectoral strength. Should the index manage to cross above its 50-DMA/Jul 8 high (6,420/6,498), technical watchers would eye a firmer rebound.
  • Bangko Sentral ng Pilipinas will keep tightening policy to prop up the beleaguered peso and curb inflation, Governor Medalla said Thursday, adding that the trajectory of rate hikes will be determined by data. Medalla had earlier suggested that policymakers will hike the key rate by either 25bp or 50bp in August.
  • The peso has been the second-best performer in emerging Asia this week, lagging only the Korean won. Bangko Sentral's stated intention to stick with its hawkish bias, most clearly expressed in a jumbo 75bp rate hike delivered at an off-cycle meeting two weeks ago. The BSP has reaffirmed its plans to keep tightening amidst this week's moderation in hawkish Fed expectations, facilitated by an underwhelming U.S. GDP print yesterday.
  • On a different front, Abra province declared a local state of calamity in relation to the powerful earthquake which struck the main island of Luzon a couple of days back. President Marcos said there was no need to declare a nationwide state of calamity.
  • Looking ahead, Philippine CPI will cross the wires next Friday.

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