Philippine Markets: 18 February 2011

18 February 2011

USD/PhP: 43.34 - 0.08 PSEi: 3851.24 - 15.14
USD/JPY: 83.28 PFINC: 847.15 - 5.35
EUR/USD: 1.3598 BDO: 47.90 - 0.75
GBP/USD: 1.6164 BPI: 54.20 - 0.40
PDSTF3M: 3.1673 MBT: 59.85 - 0.30
Prices as of 4:00pm Source: Bloomberg, Reuters


Philippine Interest Rate Outlook

Secondary market rates moved sideways this week despite rising inflation risks haunting the markets. Short-term yields dropped while bonds with longer tenors moved up. Monetary authorities have hinted to the market that any future moves will be preemptive against any inflation risk.

Continue to expect interest rates to move sideways with upward bias in the week ahead.

Philippine Equities Outlook

Local shares rose by 2.72 percent week-on-week to 3851.24 for the first time in three weeks on bargain hunting activities after sell-off during the previous weeks. Strength in US equity markets also helped buoy the rebound. However, investors remained cautious as recovery remains fragile.

Chartwise, the week's close continues to suggest the market's recent uptick is a mere technical rebound and the rally could strech to the 3,900 levels. Near-term bias continues to support further tests towards the 3,600-3,650 levels in the coming weeks.


Philippine Peso Outlook

The local currency rose 1.10 percent to 43.34 as the dollar weakened against major currencies.

Chartwise, continue to expect the currency to range between the 43.25 - 43.70 levels in the week ahead. A confirmation close above the 44.00-44.10 level will confirm the bottom at the 43.34 levels and signal a retest of the 44.50 levels (the upper band of the 43.50-44.50 consolidation range. However, break of 43.34 suggests tests toward 43.00 / 43.25 levels.


BDO UNIBANK INC.

Jonathan Ravelas
Chief Market Strategist
(632) 858-3145

Rhys Cruz
Junior Researcher
(632) 858-3001