Philippine Markets: 14 January 2011

14 January 2011

USD/PhP: 44.23 + 0.08 PSEi: 4132.04 + 61.93
USD/JPY: 82.51 PFINC: 929.29 + 14.99
EUR/USD: 1.3394 BDO: 56.00 + 0.20
GBP/USD: 1.5843 BPI: 57.75 + 1.75
PDSTF3M: 1.1519 MBT: 65.70 + 1.00
Prices as of 4:00pm Source: Bloomberg, Reuters



Philippine Interest Rate Outlook

Secondary market rates moved sideways week on week as investors await full year 2010 budget deficit figures towards the end of the month. Market players expect the 2010 PH annual deficit to be lower than its full year target of PhP325bn.

Rising inflation expectation, arising from an increase in commodity prices has caused some upward pressure on the rates.

Expect interest rates to move sideways next week.

Philippine Equities Outlook

Local stocks dropped 1.68 percent week-on-week to 4132.04 as profit-taking activities took place amidst lack of market moving news. Inflation concerns also gripped the market as transport and food prices continue to creep up. However, bargain hunting activities appeared near the 4,000 levels caused the market to close week off the lows.

Chartwise, the week’s close at 4132.04 suggests test of 4,200-4250 levels in the near-term. Failure for the market to clear the said levels in the week ahead could call for a re test of the 4000 levels.

Philippine Peso Outlook

The local currency lost 0.18 percent week-on-week to 44.23 despite dollar weakness against major currencies as demand for the greenback rose on rising commodity prices. The currency continued to trade between 43.50-44.50 range since November 2010.

Chartwise, continue to see the currency to test the 44.50 levels in the near-term. Only a decisive break below the 43.50 levels will encourage tests towards the 43.00 levels