PHP Firms, March Headline Inflation Surprises Lower, But Core Still Strong

USD/PHP is down in early trade, last around 54.40/45, +0.15% firmer in PHP terms versus closing levels yesterday. This is in line with softer USD trends elsewhere. Lows from the second half of March came in near 54.25, so this level is likely to be eyed by Peso bulls. On the topside the 20-day EMA is around 54.60, while earlier April highs come in at 54.76.

• Out a little earlier was March inflation figures, which came in below expectations. The headline y/y printed at 7.6%, versus 8.0% expected. The prior read was 8.6% y/y. Note for March headline prices fell 0.2% m/m, aided by lower food and transport costs.
• Core inflation still firmed to 8% y/y, fresh highs back to 1999. The headline CPI print was at the bottom end of the BSP's range, but still firm core pressures may prompt BSP to tighten further (note the next BSP meeting is May 18).
• Onshore equities are up in early trade, +0.45% for the PSEi, likely buoyed by the weaker inflation outcome. This could have some positive spill over to PHP but the currency has been outperforming equity trends in recent weeks.