PHP: Peso Slips Into Close, BSP Guides Toward Further Easing
USD/PHP crept higher into the close, despite a parallel downtick in the BBDXY Index, as BSP Governor Remolona pointed to outstanding room for more rate cuts this year. The rate was last quoted +0.042 at 57.368. USD/PHP 1-month NDF last trade +0.17 at 57.45.
- BSP Governor Remolona signalled that there is more monetary easing in the pipeline this year after announcing the expected 25bp cut today. The central bank revised its inflation outlook lower, with the Governor noting that the outlook allows for "a shift toward a more accommodative monetary policy stance." He said that current policy is still slightly restrictive and guided that the BSP is looking at a few more cuts, not necessarily at each meeting, with the easing cycle expected to be completed in 2025. Still, the BSP will take a measured approach and proceed in "baby steps - 25bp at a time."
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BONDS: Tnotes/Bund spread lowest since July 2023
- The Tnotes/Bund spread continues to see some huge tightening moves, another 4bps in early trade, and has now fell from a ~226.9bps high in December to 133bps today.
- While some Investors will look at the 130.00bps Psychological level, next support comes at ~128.5bps, the 76.4% retrace of the 2023/2024 range.
(Chart source: MNI/Bloomberg).
SILVER TECHS: MA Studies Remain In Bull-Mode Condition
- RES 4: $35.736 - 1.236 proj of the Feb 14 - Apr 12 - May 2 ‘24 swing
- RES 3: $34.903 - High Oct 23 and the bull trigger
- RES 2: $34.000 - Round number resistance
- RES 1: $32.765/33.397 - High Mar 5 / High Feb 14 and the bull trigger
- PRICE: $32.287 @ 08:06 GMT Mar 11
- SUP 1: $31.587/30.815 - 50-day EMA / Low Feb 28
- SUP 2: $30.691/29.704 - Low Feb 3 / Low Jan 27
- SUP 3: $28.748 - Low Dec 19 and bear trigger
- SUP 4: $28.446 - 76.4% retracement of the Aug 8 - Oct 23 bull cycle
Recent weakness in Silver appears to have been a correction and last week’s strong gains reinforce this theme. A continuation higher would refocus attention on the bull trigger at $33.397, the Feb 14 high. Clearance of this level would resume the uptrend. Moving average studies are in a bull-mode set-up, highlighting a dominant uptrend. Key support to watch lies at $31.587, the 50-day EMA, and $30.815, the Feb 28 low.
RIKSBANK: Balanced Commentary From Thedeen Ahead of Finance Committee Hearing
Summary of Governor Thedeen's presentation to the Riksdag Committee on Finance here. A few initial highlights:
- "We now see signs of a business cycle rebound. GDP growth was clearly higher than expected in the second half of last year. At the same time, the signals for the beginning of this year are more mixed"
- "Recent inflation outcomes have been slightly higher than expected. “It remains to be seen how much of this is due to temporary factors and what affects the inflation outlook in the slightly longer term, but it calls for vigilance"
- The international turmoil has changed market growth expectations, with weaker growth now expected in the United States and stronger growth in Europe than was anticipated just one month ago. In this environment, European long-term interest rates have risen and the krona has strengthened
- Unsurprisingly no clear signals for the March decision: "Ahead of our next monetary policy meeting on 19 March, we will weigh up how the new information affects the outlook for economic activity and inflation in Sweden"
All five of the Riksbank Executive Board will participate in today's hearing, so it will provide an insight into whether and by how much views differ on the outlook. While a March cut appears very unlikely given recent data outturns, it's worth noting that Thedeen's summary flags "mixed" activity indicators at the start of this year, and the potential for recent upside inflation drivers to be "temporary". This could suggest the risks to policy (even if much smaller than a few weeks ago) remain tilted towards more cuts.
