28 October 2010
USD/PhP: 43.102 - 0.158 PSEi: 4260.69 - 24.38
USD/JPY: 81.33 PFINC: 984.65 - 3.89
EUR/USD: 1.3824 BDO: 60.75 - 0.20
GBP/USD: 1.5786 BPI: 58.00 + 0.55
PDSTF3M: 3.8308 MBT: 78.00 - 1.25
Prices as of 4:00pm Source: Bloomberg, Reuters
Philippine Interest Rate Outlook
Secondary money market rates moved sideways ahead of the release of October inflation figure next week. Expectations for inflation ranged between 2.5 - 3.5 percent. This continues to support low interest rate environment. Continue to see rates to move sideways to down in the week ahead.
Philippine Peso Outlook
The local currency rose for the fourth straight month fueled by a weaker dollar against most major currencies particularly against the Euro. Other factors that supported the currency's strength is the flow of remittances from Filipinos working overseas and the portfolio flows to the local stock market.
Chartwise, the currency is hovering near an important support range, the 42.80- 43.00 levels. Should these levels hold in the near-term, expect a minor bounce back to 43.50-43.70 levels. However, should the said levels fail to contain, a break below the 42.80 levels could call for further tests towards the 42.25 - 42.50 levels.
Philippine Equties Outlook
Local shares moved sideways this week after it registered a new high last week at 4299.08. Expectations of better 3Q corporate earnings and stable inflation figures continue to prompt investors to accumulate stocks. Profit-taking activities by some investors caused the market to fall off from the week's high.
Chartwise, the market appears to encountering some resistance at the 4,300 levels. This is supported by the bear divergence in the price chart and the Relative Strength Index. This implies the market is ripe for a correction and could retest the 4,200 levels first before it attempts to 4,300-4,500 level towards the end of the year. Immediate support and resistance is 4,200 and 4,250 levels, respectively
RESEARCH DESK ANNOUNCEMENT
Please be advised that there will be no Morning Brief and Philippine Markets tomorrow. We will resume sending on November 2.
Jonathan Ravelas
Chief Market Strategist
(632) 858-3145
Rhys Cruz
Junior Researcher
(632) 858-3001
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