AUD/PHP Outlook: Slightly positive, but likely to move sideways as the rate is above its recent average yet lacks a clear driver.
Key drivers:
• Rate gap: The Reserve Bank of Australia (RBA) is expected to increase interest rates soon, while the Bangko Sentral ng Pilipinas (BSP) may cut rates, widening the rate differential in favor of the AUD.
• Risk/commodities: Recent turmoil in the metals market has pressured the Australian dollar, but the potential recovery of commodity prices, linked to supply dynamics, could support the AUD.
• One macro factor: Australia is facing surging inflation, which is prompting speculation about RBA tightening, providing a cushion for the AUD.
Range: The AUD/PHP is likely to hold around current levels, possibly testing recent highs if commodity prices recover effectively.
What could change it:
• Upside risk: A solid response from the RBA with hawkish guidance could boost the AUD.
• Downside risk: Significant further weakening of the peso, alongside heightened geopolitical tensions, could pressure the AUD/PHP.