USD/PHP Close TO Multi-Week Lows Ahead OF BSP Decision

USD/PHP is a touch lower in the first part of trade, sitting under 55.60. This is close to multi-week lows going back to the first part of May. The pair is sub both the simple 50 and 200 day MAs, but the 100-day sits lower at ~55.27. The 1 month NDF sits slightly higher at 55.60/65.

• The BSP decision, due later, is expected to see rates remain on hold (see our preview here). There has been some discussion of rate cuts, although a lot will depend on how the Fed outlook and the local inflation backdrop unfolds. Finance Secretary Diokno mentioned Q1 2024 as a possible window for cuts.
• BofA noted that PHP could weaken to 57.50 in Q3 if the BSP doesn't follow the Fed with higher rates. The bank sees the currency vulnerable from a low real rates and twin deficits stand point.
• Elsewhere, local equities are weaker, down 0.70% with the PCOMP sub 6400 and we aren't too far off intra-day YTD lows. The index is also 10% down from its Jan highs. A plan to tax food and beverage companies is being cited as a source of weakness. Still, the spill over to PHP FX is very limited at this stage.