Peso Underperforms, Local Data Under Scrutiny

Hawkish Fed repricing in response to the U.S. jobs report released Friday has lent support to USD/PHP as local markets re-opened. The peso is the worst performer in emerging Asia, with some linking its underperformance to a decline in the Philippines' stack of foreign reserves.

• Spot USD/PHP trades +0.398 at PHP55.603, with bulls looking for gains past Jul 28 high of PHP55.975, which would expose record highs of PHP56.500. Bears see Jul 29 low/50-DMA at PHP55.057/54.830 as their initial targets.
• USD/PHP 1-month NDF last +0.280 at PHP55.710. A break above Jul 28 high of PHP56.060 would open up all-time highs at PHP56.740. Bears look for a dip through the 50-DMA, which kicks in at PHP54.974.
• The unemployment rate stayed at 6.0% in June, according to the latest statistics from the PSA. In positive signs, the participation rate edged higher to 64.8%, while the rate of underemployment slipped to 12.6%.
• The Philippines' foreign reserves shrank to $98.8bn in July, according the latest data from the BSP, the lowest level in two years.
• The cost of damage to infrastructure from the earthquake that struck Abra province last month reached PHP1.59bn, the government said.
• Elsewhere, House Speaker Romualdez suggested that parliament will start deliberations on the proposed 2023 national budget as soon as the executive department submits it to Congress.
• Focus turns to Philippines Q2 GDP & June trade data, due for release tomorrow.