NZD/PHP Outlook: Bullish, as the rate is above its recent average and supported by strong inflation expectations in New Zealand.
Key drivers:
• Rate gap: The Reserve Bank of New Zealand is likely to tighten monetary policy due to rising inflation, while the Bangko Sentral ng Pilipinas is considering rate cuts to support the economy.
• Risk/commodities: A positive global risk appetite is boosting the NZD's strength, as improved economic data helps push the currency higher.
• One macro factor: Business confidence in New Zealand has reached its highest level since 2014, reinforcing expectations for economic growth that could further support the NZD.
Range: The NZD/PHP is expected to drift within its recent range, likely testing upper levels as the NZD maintains its strength.
What could change it:
• Upside risk: A further unexpected rise in New Zealand's inflation could lead to sharper monetary tightening.
• Downside risk: Continued weakness in the Philippine peso, driven by the BSP's dovish stance, could create downward pressure on the NZD/PHP.