USD/PHP Breaks Lower, Death Cross Forming

USD/PHP is off 1% so far today, with the pair back sub 54.00, fresh cyclical lows back to June last year. This breaks the pair out of recent ranges (54.30/54.80 roughly), with peso bulls potentially emboldened by the formation of a death cross, as the simple 50-day MA looks to break below the 200-day MA.

• Like elsewhere in the region, the formation of a death cross has been positive for the local FX this past week. We saw that evident in the 1 month USD/TWD space. Incidentally, TWD is the only EM Asia currency to outperform PHP so far this week.
• The PHP is seeing benefit from the pullback in US yields, perhaps more so than elsewhere in the region owing to its current account deficit dynamics. Historically, PHP has been more sensitive to US real yield moves compared to other countries in the region, particularly those with external surpluses.
• Philippine equities are lower today, off 1% as the market continues to struggle to gain traction above the 7000 level. Net equity flows from offshore investors have been positive this week though.
• The other focus point is likely to geopolitics as the US and the Philippines announced greater access for the US military to local bases.