NZD/PHP Outlook:
Slightly positive, but likely to move sideways, as the NZD is above its recent average but lacks a clear driving force.
Key drivers:
• Rate gap: The Reserve Bank of New Zealand is expected to cut interest rates, differentiating its monetary policy from the Bangko Sentral ng Pilipinas, which may also lower rates but hasn't committed yet.
• Risk/commodities: High dairy prices continue to support New Zealand's export income, adding strength to the NZD amidst a mixed risk environment.
• One macro factor: Speculation over a potential rate cut by the Bangko Sentral ng Pilipinas has left the PHP vulnerable, contributing to a weaker economic outlook.
Range:
The NZD/PHP is likely to drift within its recent 3-month range.
What could change it:
• Upside risk: A stronger-than-expected labor market report in New Zealand could boost the NZD further.
• Downside risk: Renewed concerns over U.S.-China trade tensions could adversely affect the NZD, especially if they impact commodity prices.