The Philippine peso and stocks could remain volatile this week as a hawkish US Federal Reserve, crude oil prices above USD100 a barrel and heightened Middle East tensions keep investors cautious.
2TradeAsia said the combination of rising oil prices and a weakening peso has defined the third quarter, with uncertainty likely to persist ahead of the Sept. 15-16 Federal Open Market Committee meeting.
Markets are looking for clearer signals on the Fed’s rate path as inflation risks from energy prices complicate the outlook for monetary easing.
The peso remains particularly vulnerable. Higher oil import costs could widen the current-account deficit, while seasonal dollar demand ahead of the holiday period may add pressure.
2TradeAsia expects continued volatility after the currency touched record lows and advised investors to favor exporters and dollar earners over fuel- and import-intensive companies.
Rizal Commercial Banking Corp. chief economist Michael Ricafort sees resistance for the peso at P62.60-P62.70 per dollar, followed by the record intraday low of P62.775 and the uncharted P62.80-P63.00 area. Immediate support is at P61.95-P62.25.
For equities, 2TradeAsia expects thin and volatile trading as investors avoid taking large positions before the Fed decision.
It sees the 6,000 level as a key psychological test for the PSEi.
Ricafort puts initial support at 6,000, followed by 5,900 and 5,840, while resistance is seen at 6,070-6,150 and 6,215-6,280.
The brokerage remains constructive on mining stocks as stronger metal prices offer some insulation from the peso’s weakness, while DHI could draw attention ahead of the consolidation of Tampakan mining rights.
Beyond the Fed, investors will track Middle East developments and oil prices, as well as Philippine remittances, balance-of-payments and inflation data.
The bias is defensive as currency weakness and energy costs remain immediate risks, while exporters, dollar earners and selected miners offer relative protection.
