EUR/PHP Outlook:
The EUR/PHP pair is slightly weaker, likely to move sideways, as it trades just below its recent average and is positioned within the mid-range of the past three months.
Key drivers:
• Rate gap: The European Central Bank's focus on inflation contrasts with the Bangko Sentral ng Pilipinas' efforts to enhance monetary policy efficiency through a more developed interest rate swap market.
• Risk/commodities: Oil prices are currently high, which can pressure the Philippine economy, potentially weakening the PHP as it relies on oil imports.
• One macro factor: Ongoing political and fiscal risks in the Philippines, due to a recent corruption scandal, continue to shake investor confidence and affect the peso's stability.
Range:
Expect the EUR/PHP to hold steady within its recent range, due to mixed signals from both economic fronts.
What could change it:
• Upside risk: A significant improvement in Eurozone growth indicators, such as stronger PMI data.
• Downside risk: Further depreciation of the PHP linked to sustained political instability and economic concerns in the Philippines.
