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PHP: USD/PHP Right On Record Highs At 59.00, But Implied Vols Sub Recent Highs

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EM BulletPhilippinesBulletAPACEmerging Market News

Spot USD/PHP sits very close to 59.00 in latest dealings, so fresh record highs in the pair. We are little changed in the first part of Tuesday trade, despite broader USD gains (BBDXY index up +0.40%), amid tariff threats from incoming US President Trump.

  • The RSI (14) is elevated but not in overbought territory, last near 67.45. To be fair, we have been close to overbought territory on this metric since mid Oct, when spot was closer to 57.50. On the downside, the 20-day EMA continues to track highs and is last near 58.58.
  • The BSP and Philippines government may be reluctant to let the pair break rapidly through the 59.00 level, but absent a sharp turn around in broader USD sentiment, a test above the level seems likely.
  • In any case, implied vol markets, while elevated are comfortably off late Oct/early Nov highs. The 1 month was last around 6.435%, the 6 month, just above 6.50%. BSP's FX reserve backdrop is still very comfortable and capable of managing FX volatility
  • On the data front, we have budget balance figures for Oct out tomorrow. Bank lending data for the same month prints on Friday, while the Nov PMI is out next Monday.
  • Most focus is likely to rest on the Nov CPI due next Thursday. This will be a key input ahead of the BSP meeting later in Dec, where Governor Remolona has stated could see a cut delivered or no change. 
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Spot USD/PHP sits very close to 59.00 in latest dealings, so fresh record highs in the pair. We are little changed in the first part of Tuesday trade, despite broader USD gains (BBDXY index up +0.40%), amid tariff threats from incoming US President Trump.

  • The RSI (14) is elevated but not in overbought territory, last near 67.45. To be fair, we have been close to overbought territory on this metric since mid Oct, when spot was closer to 57.50. On the downside, the 20-day EMA continues to track highs and is last near 58.58.
  • The BSP and Philippines government may be reluctant to let the pair break rapidly through the 59.00 level, but absent a sharp turn around in broader USD sentiment, a test above the level seems likely.
  • In any case, implied vol markets, while elevated are comfortably off late Oct/early Nov highs. The 1 month was last around 6.435%, the 6 month, just above 6.50%. BSP's FX reserve backdrop is still very comfortable and capable of managing FX volatility
  • On the data front, we have budget balance figures for Oct out tomorrow. Bank lending data for the same month prints on Friday, while the Nov PMI is out next Monday.
  • Most focus is likely to rest on the Nov CPI due next Thursday. This will be a key input ahead of the BSP meeting later in Dec, where Governor Remolona has stated could see a cut delivered or no change.