USD/PHP Backs Away From 57.00 Test, But Weaker Onshore Equities Could Curb Peso Rebound

USD/PHP is tracking lower in the first part of Friday dealing, last near 56.86. Note we closed yesterday at 56.97, so very close to the 57.00 resistance point. There was little positive follow through for the local currency follow yesterday's off-cycle rate hike by the central bank.

• We remain well within recent ranges of 56.50-57.00, but focus is arguably on a topside break the longer broader USD sentiment firms/stays elevated.
• A further BSP hike is likely given the hawkish rhetoric BSP Governor delivered ("feel a little bit behind", when they decided not to hike in September). The 2024 inflation forecast was also revised higher by the central bank.
• We get Oct CPI on Nov 7, which will be a key input. The BSP is also likely to take into account the early November Fed meeting outcome. The next official BSP policy meeting is on Oct 16th.
• Onshore equities are under pressure, with PCOMP sub 6000 (off 1% today) and back to lowest levels in around a year. Citibank notes the off cycle hike will likely weigh on local banks (see this BBG link).