Jump to content

AUD/USD clings to support after Chinese CPI and PPI surge higher

Recommended Posts

Australian Dollar remains lower on Chinese inflation data and China’s CPI and PPI gauges show increasing price pressures.

Source: Bloomberg

The Australian Dollar remained slightly lower through the Asia-Pacific session after Chinese inflation data crossed the wires. China’s consumer price index (CPI) for October was 1.5% on a year-over-year basis, according to the National Bureau of Statistics (NBS). That was over the median consensus forecast of 1.4% y/y and up from September’s 0.7% increase.

China’s factory-gate prices also increased in October, with the nation’s producer price index (PPI) rising 13.5% y/y, up from September’s 10.7% rise. The higher input costs for factories come as the world deals with lingering supply chain issues from the Covid pandemic. Surging energy costs likely contributed to October’s PPI increase, with coal, oil, and natural gas prices at or near multi-year highs.

Policymakers have taken several steps in recent months to cool rising prices, ranging from allowing some previously banned Australian coal imports to clear customs to release stocks from strategic national reserves. A slowdown in China’s property sector, which has been exacerbated by the Evergrande crisis, is also clouding the outlook for Asia’s largest economy.

The price of Fantasia Holdings – another embattled Chinese property developer – is down 50% in Hong Kong after failing to make a coupon payment due last month. The stock started trading on Wednesday for the first time since being suspended in late September. Traders will shift their focus to US inflation data due out tonight.

Australian Dollar technical outlook

AUD/USD faces downward pressure, with prices eyeing a second daily loss. The 50-day Simple Moving Average (SMA) is underpinning the currency pair through Wednesday’s session, but if that level gives way bears are likely to achieve a further push lower. For now, with MACD and RSI aiming lower, the most likely short-term path is biased to the downside.

Source: TradingView

This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. This information Advice given in this article is general in nature and is not intended to influence any person’s decisions about investing or financial products.

The material on this page does not contain a record of IG’s trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

 Thomas Westwater | Analyst, DailyFX, New York City
10 November 2021

  • Like 1
Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • Posts

    • Sainsburys full year earnings and Unilever’s first quarter trading update both say the same thing, UK consumers are in for higher prices. The war in Ukraine, supply chain issues and the effects of ongoing Covid all to blame.      
    • US Dollar (DXY) Daily Price and Analysis US Q1 GDP may stall the greenback’s advance. A 20-year high nears for the US dollar. The multi-month US dollar rally continues with the greenback printing a fresh high today ahead of the first look at US Q1 GDP at 12.30 GMT. The US dollar basket (DXY) has been boosted by renewed weakness in the Euro and the Japanese Yen, as investors move from lower-yielding to higher-yielding currencies, while safe-haven flows continue to benefit the greenback. The US growth release later in the session is expected to show a sharp slowdown from the robust Q4 figure of 6.9%. The markets are currently pricing in growth of just 1% for the first three months of this year, with the slowdown mainly due to a reduction in inventory accrual over the quarter. This release is unlikely to move the greenback, unless there is a large miss or beat, as the Fed believe that 2022 US growth will be robust enough to let them tighten monetary policy sharply without damaging the economy. The latest US Core PCE data – the Fed’s preferred inflation reading – is released on Friday and this may have more effect on the US dollar than today’s GDP data. For all market moving economic data and events, see the DailyFX Calendar. The ongoing US dollar rally has been aided by weakness across a range of G7 currencies including the Euro, the Japanese Yen, and the British Pound. The Euro continues to battle with lowly growth expectations, exacerbated by energy concerns, the British Pound is mired by weak economic data, while the Japanese Yen is in freefall as the BoJ continues with its ultra-loose monetary policy.   The US dollar continues to press higher and looks set to break above 103.96, the March 2020 high. Above here the US dollar would be back at levels last seen nearly two decades ago. The March resistance will likely hold in the short-term, especially with month-end portfolio rebalancing at the end of the week, but US dollar strength is set to continue in the months ahead. USDOLLAR (DXY) WEEKLY PRICE CHART – APRIL 28, 2022 {{THE_FUNDAMENTALS_OF_BREAKOUT_TRADING}} What is your view on the US Dollar – bullish or bearish?   Apr 28, 2022 | DailyFX Nick Cawley, Strategist
    • While Tesla has nothing directly to do with Elon Musk buying Twitter - TSLA stock closed down 12% on news that Musk may have to sell stock and use other holdings to stand against the loan to finalise the purchase of the social media giant.        
  • Create New...