PHP: USD/PHP Under 56.00, Fresh Lows Back To Sep 2024
USD/PHP has fallen below 56.00 for the first time since Sep last year. We were last under 55.90, up close to 0.50% in PHP terms for the session. As the chart below highlights there isn't much in the way of support levels until we hit 55.50, last tested in Sep 2024. All key EMAs are tracking lower, with the 20-day back at 56.70/75. Broader USD sentiment is mostly softer for USD/Asia pairs, which has been a recurring theme as we approach month end.
- The continued track lower in real US yields is a PHP support point as it is elsewhere in the region. (10yr back under 2%). Local equities are testing late March highs, while we aren't there yet for broader indices like the MSCI Asia Pac index. This points to some Philippines equities outperformance. Offshore investors have been modest buyers of local equities so far this week.
- Earlier we had March trade data, which showed firmer exports and imports relative to market expectations. The trade deficit was close to forecast at -$4.128bn, wider than Feb's -$3.457bn outcome. This deterioration was not enough to dent PHP sentiment, particularly with the Citi PHP terms of trade proxy continuing to suggest further improvement in the trade deficit position.
- For April, PHP is up 2.35% versus the USD, mid range compared to rest of EM Asia. There doesn't appear to any concern from a policy standpoint in terms of PHP gains.
- On Friday we get the Apr PMI, then next week the Apr CPI is out.
Fig 1: USD/PHP Falls Sub 56.00
Source: MNI - Market News/Bloomberg
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JGBS AUCTION: 2-Year JGB Auction Results
The Japanese Ministry of Finance (MoF) sells Y1,978.8bn 2-Year JGBs:
- Average Yield: 0.863% (prev. 0.826%)
- Average Price: 100.071 (prev. 99.948)
- High Yield: 0.869% (prev. 0.833%)
- Low price: 100.060 (prev. 99.935)
- % Allotted At High Yield: 46.8270% (prev. 62.4996%)
- Bid/Cover: 3.4085x (prev. 3.1637x)
ASIA STOCKS: India Inflows Intensify as Taiwan Goes the other Way.
With tariff headlines dominating, India is considering lowering tariffs on US agriculture products as strong inflows continue into the country. Taiwan and South Korea enjoyed a short respite in flows, only for that to turn significantly negative again with Indonesia and Malaysia out.
- South Korea: Recorded outflows of -$513m Friday, bringing the 5-day total to -$228m. 2025 to date flows are -$4,095m. The 5-day average is -$46m, the 20-day average is -$75m and the 100-day average of -$93m.
- Taiwan: Had outflows of -$1,028m Friday, with total outflows of -$2,607m over the past 5 days. YTD flows are negative at -$17,432. The 5-day average is -$521m, the 20-day average of -$614m and the 100-day average of -$255m.
- India: Saw inflows of +$947m as of the 27th, with a total inflow of +$3,231m over the previous 5 days. YTD outflows stand at -$12,796m. The 5-day average is +$646m, the 20-day average of -$14m and the 100-day average of -$144m.
- Thailand: Recorded outflows of -$67m yesterday, totaling -$121m over the past 5 days. YTD flows are negative at -$1,128m. The 5-day average is -$24m, the 20-day average of -$30m the 100-day average of -$18m.
- Philippines: Saw inflows of +$1m yesterday, with net outflows of -$34m over the past 5 days. YTD flows are negative at -$214m. The 5-day average is -$7m, the 20-day average of +$2m the 100-day average of -$7m.
JGBS AUCTION: 2Y Supply Faces A Yield Near Highest Since ‘08 But Steeper Curves
The Japanese Ministry of Finance (MoF) will today sell Y2.6tn of 2-Year JGBs. The MoF last sold 2-year debt on 27 February 2025.
- Currently, the 2-year yield stands slightly higher than last month’s outing, hovering just below the highest level since 2008 set last week.
- The 2/5 and 2/10 yield curves are 5-10bps steeper compared to the previous month's auction.
- Given these dynamics, it remains uncertain whether today’s elevated 2-year yield will be sufficient to attract strong demand in the auction.
- Results are due at 0335 GMT / 1235 JST.
