PHP: USD/PHP Back To Mid-Point Of Recent Range, BSP Governor Still Sounds Hawkish
USD/PHP sits back at 56.74, around 0.22% firmer in PHP terms versus yesterday's close. Like for some other parts of the region, the pair is testing downside support at the 20-day EMA. Still, for USD/PHP we remain well within recent ranges. Lows this month have been marked near 56.50, while resistance at 57.00 remains in place on the topside.
- BSP Governor Remolona has spoken today, stating that while corporate loans are elevated the overall banking system remains in strong sharp (see this BBG link).
- The Governor also stated the central bank can't say that they are done with monetary tightening, while a 25bps hike won't be ruled out (as upside risks to inflation have materalized).
- Presumably the likelihood of an intra-meeting move from the BSP has fallen somewhat in light of reduced Fed tightening odds at the November policy meeting. The next BSP meeting is on the 16th of November (coming after the Nov 1 Fed meeting).
- The local Philippines data calendar is empty until next week when remittances data for August prints.
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BONDS: Futures Sharply Cheaper, 10Y Yield > 0.70%
At the Tokyo lunch break, JGB futures have experienced a significant decline, dropping by 65 in comparison to their settlement levels. This comes after remarks made by BoJ Governor Ueda over the weekend.
- There hasn’t been much in the way of domestic drivers to flag, outside of Ueda’s comments.
- JGB benchmarks are cheaper, with yields 1.3bp (1-year) to 6.7bp (futures linked 7-year) higher, amid speculation that the central bank is preparing to end its negative rate policy. The benchmark 10-year yield is 4.8bp at 0.703%, a post-YCC tweak high.
- The 5-year is 6.0bp cheaper at 0.283% ahead of supply tomorrow.
- Swap rates are higher across the curve, with the belly underperforming. Swap spreads are wider, apart from the belly of the curve.
JPY: USD/JPY Through Friday Lows, But Limited Follow Through
USD/JPY hit fresh lows for the session in recent dealings (146.55), we sit slightly higher now, last near 146.65. This put us through Friday lows, which came about after intervention warning related headlines, although we have seen limited follow through. Yen remains the strongest performer in the G10 space, up 0.80% at this stage, with AUD next at +0.60% (0.6410/15).
- There didn't appear obvious any fresh catalyst for this latest round of yen strength. 10yr swap ended the morning session close to session highs near 0.88%. The 10yr cash JGB near 0.70%.
AUD: AUDUSD Breaches 64c As USD Weakens
Aussie is stronger in APAC trading today after comments from Yellen that there should be a US soft landing and hawkish ones from BoJ’s Ueda. AUDUSD has broken through 64c. It struggled to hold breaks last week but is currently trading 0.6% higher at around 0.6414, close to the intraday high of 0.6419. Initial resistance is 0.6456, the 20-day EMA. The USD index is 0.3% lower.
- Aussie is stronger against most major crosses but not versus the yen where it is down 0.2% to 94.04. AUDNZD is up 0.1% to 1.0852. AUDEUR is 0.4% higher at 0.5982 and AUDGBP +0.3% to 0.5132. Both are close to today’s highs.
- Equity markets are mixed with the Hang Seng -1.4%, ASX steady, but the CSI up 0.3%. The S&P e-mini is slightly higher. Oil prices are lower with WTI down 0.6% to $86.99/bbl. Copper is down 0.8% but iron ore is higher around $115.50/t.
- The Fed is now in the blackout period ahead of the September 20 meeting and there isn’t any US data. Europe is also quiet.
