Goldman Sachs: Short Philippines' Peso against China's offshore Yuan - Bloomberg

Short Philippines' Peso (PHP) against China's offshore Yuan (CNH), as the latter is likely to benefit from the improving US-China trade sentiment and the former may underperform its peers this year due to the dovish orientation of its central bank and increased fiscal spending, Goldman Sachs strategist Zach Pandl wrote in a Jan. 10 note, according to Bloomberg. 

The offshore Yuan is currently up 0.75% on a year-to-date basis and is Asia’s top-performing currency this year. Meanwhile, the peso is trading at 50.54 per US dollar, representing a 0.22% gain. The oil-importing nation's currency had dropped to a low of 51.30 per US dollar last week, tracking the rally in black gold, triggered by the US-Iran tensions. 

Key quotes

The peso will underperform non-Japan Asian currencies driven by idiosyncratic factors and prefer to express this via being long the offshore Chinese yuan.

We expect the higher overall pace of public infrastructure spending and private investment to cause a deterioration in the Philippines' current account

We expect China’s economic growth to bottom out in the fourth quarter and for activity data to pick up in 2020.