USD/PHP Moves Off Recent Highs, Bucking Firmer USD Levels

USD/PHP is lower, last near 57.50/55, around 0.25% stronger in PHP terms. The peso is bucking the broader stronger dollar trend (BBDXY +0.20%) so far today. The pair has progressively moved away from recent highs near 58.00.

• Recall last week we had comments from the BSP Governor that they were prepared to intervene in FX markets. This hinted that the 58.00 level was a potential short term line in the sand. This has potentially curbed further upside interest in the pair. Note we still sit away from support points, with the 20-day EMA back around the 57.13 level. The IMF noted in commentary today the local currency could face pressure from interest rate differentials.
• Still, cross asset sentiment is better, with Philippine equities recovering strongly in recent weeks. Some stability in energy prices and US real yields is also likely helping at the margin.
• The local data calendar is quiet until Thursday when the April PMI is due. Note we get April CPI next Tuesday. BSP expects headline inflation at 3.5-4.3%. Note the consensus is 4.2% y/y (prior 3.7%).
• The other watch point for markets could be tensions in the South China Sea amid reported clashes between Philippines and China vessels (per BBG).