AUD/PHP Outlook: Slightly positive, but likely to move sideways, as the rate remains above its recent average without a clear driver pushing it higher.
Key drivers:
• Rate gap: The Reserve Bank of Australia's indications of possible rate hikes contrast with the Bangko Sentral ng Pilipinas maintaining a robust stance against volatility amid the peso's depreciation.
• Risk/commodities: Recent stronger Chinese economic data is supporting demand for Australian exports, cultivating a favorable environment for the Australian dollar's strength.
• One macro factor: The Philippines' balance of payments has shown deterioration, while growth prospects remain limited, potentially weakening the peso further.
Range: The AUD/PHP is likely to hold within its recent trading range, with potential for gradual movements rather than sharp swings.
What could change it:
• Upside risk: A surprise increase in Australian interest rates could boost demand for the AUD.
• Downside risk: Further depreciation of the peso due to anticipated monetary easing may negatively impact AUD/PHP.
