The AUD/PHP pair remains bullish-to-range-bound as it currently trades above the 90-day average and sits in the upper half of its 3-month range.
Key drivers:
• Rate gap: The Reserve Bank of Australia is contemplating future rate hikes due to inflation risks, while the Bangko Sentral ng Pilipinas may ease rates, putting pressure on the peso.
• Risk/commodities: Recent weakness in oil prices can weaken the AUD, considering its ties to commodity demand, while the peso's depreciation could be exacerbated by ongoing governance issues in infrastructure projects.
• One macro factor: Weak Chinese inflation figures highlight reduced demand for Australian exports, impacting AUD performance.
Range: The pair is likely to hold near its current level, as it has traded within a stable range recently.
What could change it:
• Upside risk: Increased foreign investment in Australian infrastructure could strengthen the AUD.
• Downside risk: Further depreciation of the peso driven by anticipated monetary easing may pressure the AUD/PHP rate.