AUD/PHP Outlook: Likely to increase, with the Australian dollar trading significantly above its recent average and near recent highs, driven by strong Chinese economic data.
Key drivers:
• Rate gap: The Reserve Bank of Australia has indicated potential rate hikes, contrasting with the Bangko Sentral ng Pilipinas's forecast of easing monetary policy, favoring the AUD over the PHP.
• Risk/commodities: With oil prices stabilizing, increased demand for Australia’s commodities like iron ore supports the AUD, especially given its reliance on Chinese demand.
• One macro factor: Economic forecasts indicate limited growth prospects for the Philippines, which could weaken the peso even further.
Range: The AUD/PHP is likely to drift within its recent range as it tests upper levels while the market assesses Australia's economic indicators.
What could change it:
• Upside risk: Stronger-than-expected Australian economic data could further bolster the AUD.
• Downside risk: Any shift towards aggressive monetary easing by the BSP could pressure the peso, reinforcing AUD strength against it.