Peso Steady After Domestic CPI Release

Spot USD/PHP showed a muted reaction to the release of Philippine CPI data and last trades -3 pips at PHP48.56. Consumer prices rose 2.4% Y/Y, while BBG consensus forecast saw inflation unchanged at +2.7%.

• BSP Governor Diokno said that the CPI reading is still consistent with the central bank's view, but the balance of risks is tilted to the downside. He expressed readiness to deploy all measures in the BSP's toolkit, while noting that steps taken so far have been sufficient.
• As a reminder, the central bank's forecast for the month was +2.5%-3.3% Y/Y and the target for the year is +2.0%-4.0% Y/Y.
• Inflation was slowed by weaker increases in food and drink prices, with National Statistician Mapa noting that "there is enough supply" of food with consumers stuck at homes during brief lockdowns in several regions.
• The rate hovers just above its (almost) four-year trough located at PHP48.44. The level was last printed on Sep 1 and a break below there would bring the lower 2.0% Bollinger band at PHP48.32 into play. On the flip side, a move through Aug 27/20 highs of PHP48.67/71 would expose Aug 7 high of PHP49.10.
• Focus in the Philippines turns to next Thursday's trade data.