HKD/PHP Outlook:
Bearish, as the rate is below its recent average and near recent lows, weighed down by market expectations.
Key drivers:
- Rate gap: The Hong Kong Monetary Authority's (HKMA) interventions to maintain the HKD peg to the US dollar are impacting its value against the PHP, which is facing pressure from potential rate cuts by the Bangko Sentral ng Pilipinas (BSP).
- Risk/commodities: The ongoing fluctuations in the HKD are linked to global economic factors like US tariff announcements, while the PHP struggles amidst market concerns regarding economic performance and political issues.
- One macro factor: Speculations around the BSP potentially cutting interest rates have contributed to the peso's recent all-time lows against the US dollar, which further affects its strength against HKD.
Range:
The HKD/PHP rate is likely to drift within its recent range, reflecting a lack of strong upward momentum.
What could change it:
- Upside risk: A surprise increase in interest rates from the BSP could strengthen the PHP against the HKD.
- Downside risk: Continued weakness in the PHP due to political instability or economic concerns could push the HKD/PHP rate lower.