Bias: Bullish-to-range-bound, as the current level is above the 90-day average and in the upper half of the 3-month range.
Key drivers:
• Rate gap: The Reserve Bank of Australia's potential interest rate hikes could support the AUD while the Bangko Sentral ng Pilipinas contemplates monetary easing, which may weaken the PHP.
• Risk/commodities: Recent weakness in Chinese inflation has raised concerns about demand for Australian exports like iron ore, which could limit AUD strength despite its current position.
• One macro factor: Economic forecasts suggesting limited gains for the peso due to governance issues and reduced infrastructure spending could keep selling pressure on the PHP.
Range: The AUD/PHP is likely to test extremes, given its current position.
What could change it:
• Upside risk: Stronger-than-expected Australian economic data could boost the AUD further.
• Downside risk: Continued depreciation of the peso or deterioration in market conditions could pressure the AUD lower.