Chinese inflation data dump fails to move markets awaiting US CPI
The dump of Chinese inflation data arrived as follows:
- China’s CPI for July + 2.7% y/y (Reuters survey + 2.9%).
- China’s CPI for July +0.5% from the previous month (Reuters survey + 0.5%).
- China says food CPI for July is +6.3 percent from last year; non-food CPI +1.9 pct.
- China’s Producer Price Index for July +4.2% from a year ago (Reuters poll +4.8%).
- China’s Producer Price Index for July – 1.3% from the previous month.
Producer inflation was expected to ease in July due to the commodity price reversal, but lower household demand was expected to reduce pressure on consumer inflation, analysts at Westpac explained.
Meanwhile, Vice Dean of the Institute of Financial and Information Research Wu Chaoming believes that while there is a low probability of lowering the reserve ratio and interest rate in the future. This is due to the influence of factors such as the US-China interest rate gap that will remain inverted for a long time, domestic price stability pressure, and lack of demand restricting the effect of monetary easing.
“Given that inflation pressure is likely to rise in the third and fourth quarters, and that other major economies may continue to maintain their core policy stance of raising interest rates, the possibility of an overall rate cut and lower reserve ratio in the second half of the year is low, But the loan market quoted rate (LPR) remains unchanged.
As a result of the data, the Australian dollar is consistent in the data. Markets are awaiting US inflation data.
Analysts at TD Securities said that “the market needs to decide whether a sluggish headline is more important than a sticky, strong core.” “The dollar remains sensitive to US data surprises.” In the short term, we will focus on whether this number will shake resilient risk sentiment, as this will also help guide the price action of the US dollar in the near term. ”
If the US dollar can find a display of US inflation data today, the downside in AUD/USD can occur as follows:
AUD/USD H4 . Chart
About the Consumer Price Index
The Consumer Price Index was released by the National Bureau of Statistics of China. It is a measure of retail price changes within a representative basket of goods and services. The result is a comprehensive summary of results extracted from the urban CPI and the rural CPI.
The purchasing power of the Chinese yuan is affected by inflation. The Consumer Price Index is a leading indicator of inflation and changes in buying trends. The significant increase in the CPI indicates that inflation has become a destabilizing factor in the economy, which could prompt the People’s Bank of China to tighten monetary policy and risk fiscal policy. Generally, a high reading is considered positive (or bullish) for the CNY, while a low reading is negative (or bearish) for the CNY.