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US Dollar to Philippine Peso (USD/PHP) Exchange Rate Dips despite Rare Philippine Growth Slowdown
Published: 28 May at 3 PM Tags: Euro Exchange Rate, Dollar Exchange Rate, Currency Exchange, Euro Crisis, Exchange Rates, Economy,
The US Dollar to Philippine Peso (USD/PHP) exchange rate edged lower during Thursday’s European session.
In response to increasing speculation that the Federal Reserve will hike the benchmark interest rate before the close of the year, the US Dollar advanced across the board. The positive sentiment has overshadowed relatively poor domestic data results, with the chances of a December hike now given a 61% probability.
Thursday has seen the US asset continue to trend higher versus many of its closest rivals despite registering poor domestic data results. Again, this is mostly the result of futures traders bringing forward fed bets, although some of the appreciation can be attributed to subdued risk-sentiment as geopolitical tensions in Greece sees increased demand for safe-haven assets.
US Initial Jobless Claims was forecast to drop from 275,000 to 270,000 in the week ending May 23rd, but the actual result rose to 282,000 new benefits claimants. In addition, Continuing Claims was predicted to decline from 2211K to 2200K in the week ending May 16th, but the actual result increased to 2222K. Despite the fact that initial claims rose, most economists took it as a positive that claims remained below 300,000 for the 12th consecutive week.
Although growth data showed the Philippines economy slowed, a rare drop in a usually solid showing, the Peso gained versus many of its closest rivals. The appreciation can be linked to speculation that the first-quarter growth data was a one-off due to a steep drop in exports, and continued investment ought to see a speedy recovery in the second quarter.
On the year, Gross Domestic Product advanced by 5.2% in the first-quarter, well under the median market forecast of 6.27%. On a quarterly basis, the first-quarter growth of just 0.3% missed the market consensus of 1.76% growth significantly.
‘The Philippines economy slowed quite sharply in the first quarter, largely owing to a slowdown in export growth. We do not see cause for too much alarm. Exports are likely to recover later in the year, and domestic demand is still growing at a very healthy rate,’ Daniel Martin, senior Asia Economist at Capital Economics, wrote in a note. ‘The domestic economy is still in good shape. Admittedly our growth forecast of 6.5 percent for the full year now looks on the high side, but at least some rebound from the first quarter is very likely. We still expect rates to kept on hold for the rest of the year,’ he added.
The slow rate of growth doesn’t look as if it will trouble the central bank either, with its policymakers still predicted to make hawkish moves over the coming months. ‘We expect the BSP (Bangko Sentral ng Pilipinas) [the Philippine's central bank] to maintain its neutral to moderately hawkish rhetoric in the coming months, particularly given the looming risk of El Niño for food prices, and continue to forecast a 25 basis point-hike in the fourth quarter following our US economists' projected September liftoff for the Fed,’ said a Barclays analysts in a note.
The US Dollar to Philippine Peso (USD/PHP) was trending within the range of 44.5758 – 44.7204 during Thursday’s European session.
In response to increasing speculation that the Federal Reserve will hike the benchmark interest rate before the close of the year, the US Dollar advanced across the board. The positive sentiment has overshadowed relatively poor domestic data results, with the chances of a December hike now given a 61% probability.
Thursday has seen the US asset continue to trend higher versus many of its closest rivals despite registering poor domestic data results. Again, this is mostly the result of futures traders bringing forward fed bets, although some of the appreciation can be attributed to subdued risk-sentiment as geopolitical tensions in Greece sees increased demand for safe-haven assets.
US Initial Jobless Claims was forecast to drop from 275,000 to 270,000 in the week ending May 23rd, but the actual result rose to 282,000 new benefits claimants. In addition, Continuing Claims was predicted to decline from 2211K to 2200K in the week ending May 16th, but the actual result increased to 2222K. Despite the fact that initial claims rose, most economists took it as a positive that claims remained below 300,000 for the 12th consecutive week.
Although growth data showed the Philippines economy slowed, a rare drop in a usually solid showing, the Peso gained versus many of its closest rivals. The appreciation can be linked to speculation that the first-quarter growth data was a one-off due to a steep drop in exports, and continued investment ought to see a speedy recovery in the second quarter.
On the year, Gross Domestic Product advanced by 5.2% in the first-quarter, well under the median market forecast of 6.27%. On a quarterly basis, the first-quarter growth of just 0.3% missed the market consensus of 1.76% growth significantly.
‘The Philippines economy slowed quite sharply in the first quarter, largely owing to a slowdown in export growth. We do not see cause for too much alarm. Exports are likely to recover later in the year, and domestic demand is still growing at a very healthy rate,’ Daniel Martin, senior Asia Economist at Capital Economics, wrote in a note. ‘The domestic economy is still in good shape. Admittedly our growth forecast of 6.5 percent for the full year now looks on the high side, but at least some rebound from the first quarter is very likely. We still expect rates to kept on hold for the rest of the year,’ he added.
The slow rate of growth doesn’t look as if it will trouble the central bank either, with its policymakers still predicted to make hawkish moves over the coming months. ‘We expect the BSP (Bangko Sentral ng Pilipinas) [the Philippine's central bank] to maintain its neutral to moderately hawkish rhetoric in the coming months, particularly given the looming risk of El Niño for food prices, and continue to forecast a 25 basis point-hike in the fourth quarter following our US economists' projected September liftoff for the Fed,’ said a Barclays analysts in a note.
The US Dollar to Philippine Peso (USD/PHP) was trending within the range of 44.5758 – 44.7204 during Thursday’s European session.
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Source: moneytransfer.co.uk