Peso Still In Retreat

Spot USD/PHP shot higher as onshore Manila markets reopened this morning, with overnight risk aversion adding fuel to its rally. On Tuesday, a larger than expected slowdown in Philippine consumer price inflation pushed the rate higher, with the data interpreted as a sign that BSP will be able to keep monetary conditions loose for longer.

• The spot last operates +0.358 at PHP49.855 and a clean break above the psychological PHP50.000 barrier would give bulls a green light for targeting PHP50.380, the high print of Jun 15, 2020. Bears look for a retreat under Jun 29 low of PHP48.460.
• USD/PHP 1-month NDF last seen +0.230 at PHP50.160. Topside focus falls on PHP50.490, which capped gains on Jun 12/15, 2020. Meanwhile, a pullback under Jul 2 low of PHP49.250 would give bears some reprieve.
• Philippine Bureau of Customs said that pork imports increased sixfold in Apr and May, after the gov't slashed tariffs and raised import quotas. The cost in lost tariff revenue from early Apr to mid-June was PHP1.36bn.
• Focus in the Philippines turns to Friday's trade report for the month of May. BBG consensus is for trade deficit to narrow to $2,621bn from $2.734bn prior, with exports growth seen decelerating to +33.6% Y/Y from +72.1%.