Thursday’s Asian session will offer China's latest Consumer Price Index (CPI) and Producer Price Index (PPI) figures for March month at 01:30 GMT.
China CPI/PPI overview
China’s annualized CPI reading is expected to increase to 2.4% from 1.5% with PPI YoY likely rising to 0.4% from 0.1%. On an MoM basis, CPI is forecast to tick down from 1.0% to -0.2% for March. Recent improvements in China data and a likely trade deal between the US and China could get additional support to boost the Australian Dollar if headline inflation data follow the suit.
Barclays and Westpac had their own forecasts spread out ahead of the release. While Barclays expect an uptick in the headline inflation numbers, Westpac expects price pressures remaining contained.
How could it affect the AUD/USD?
The latest positive pattern from Australian and Chinese data, coupled with developments at the US-China trade negotiations, has been praising the Australian Dollar (AUD), strong headline economics from its largest consumer can strengthen the AUD, also known as Aussie.
It should also be noted that Australia’s consumer inflation expectations for April, up for release at 01:00 GMT on Thursday, could also affect the AUD/USD moves. The reading last came in at 4.1%. However, the main focus of the market will be on China’s inflation numbers as the dragon nation is Australia’s largest consumer.
Should there be an uptick in headline inflation numbers, the AUD/USD pair may rise further towards 0.7200 resistance-confluence, comprising 200-day simple moving average (SMA) and a downward sloping trend-line stretched since June 2018. It should also be noted that the pair’s successful break of 0.7200 enables it to challenge 0.7235 while targeting 0.7310 resistance.
On the contrary, weak data can fetch the quote back to 100-day SMA level of 0.7145 ahead of highlighting 0.7130 and 0.7110 comprising 50-day SMA.
Key Notes
AUD/USD stays at multi-week highs above 0.7150 after FOMC minutes
AUD/USD Analysis: scope to extend its advance to 0.7240/50 price zone
About China CPI
The Consumer Price Index is released by the National Bureau of Statistics of China. It is a measure of retail price variations within a representative basket of goods and services. The result is a comprehensive summary of the results extracted from the urban consumer price index and rural consumer price index. The purchase power of the CNY is dragged down by inflation. The CPI is a key indicator to measure inflation and changes in purchasing trends. A substantial consumer price index increase would indicate that inflation has become a destabilizing factor in the economy, potentially prompting The People’s Bank of China to tighten monetary policy and fiscal policy risk. Generally speaking, a high reading is seen as positive (or bullish) for the CNY, while a low reading is seen as negative (or Bearish) for the CNY.
About China PPI
The Producer Price Index released by the National Bureau of Statistics of China is a measurement of the rate of inflation experienced by producers. It captures the average changes in prices received by Chinese domestic producers of commodities in all stages of processing (crude materials, intermediate materials, and finished goods). Changes in the PPI are widely considered as an indicator of commodity inflation. If the Producer Price Index increase is excesive, it would indicate that inflation has become a destabilizing factor in the economy, The People’s Bank of China would tighten monetary policy and fiscal policy risk. Generally speaking, a high reading is seen as positive (or bullish) for the CNY, whereas a low reading is seen as negative (or bearish) for the CNY.
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