When is China CPI/PPI data and how could they affect AUD/USD?
China CPI/PPI overview
Early Friday around 01:30 GMT, the market sees March month headline inflation numbers from China, namely the Consumer Price Index (CPI) and the Producer Price Index (PPI). China’s annualized CPI reading is expected to drop from 5.2% to 4.8% with PPI YoY likely declining to -1.1% versus -0.4% earlier. On the MoM basis, CPI bears the forecast to slip from +0.8% to -0.4%.
With the figures likely to portray the economic reaction during the coronavirus (COVID-19) pandemic, AUD/USD traders will be keenly watching the outcome. However, off in Australia, due to the Good Friday, could restrict the pair’s immediate reaction.
TD Securities follow the market consensus of upbeat readings:
CPI is likely to moderate to 4.7% y/y in March from 5.2% in February. A major contributor to higher inflation over recent months has been food prices, in particular pork due initially to African Swine Flu and then supply constraints. Indeed, Pork prices rose at an annual rate of 135% y/y in Feb. We expect some softening as indicated by lower prices for farm produce. Reduced food supply chain disruptions should also help to ease inflation pressures. Weaker demand will also cap CPI likely leading to a monthly drop in CPI by around -0.9%.
How could it affect the AUD/USD?
While the COVID-19 pandemic is likely to keep the inflation data under pressure, indicating immediate downside, any upside surprises to the figures will be enough to escalate the pair’s prevailing run-up.
Technically, 50-day SMA near 0.6387 becomes the key upside barrier holding the gates for the further rise towards 0.6400. Alternatively, sellers will look for entries below the March-end top surrounding 0.6215.
Key Notes
AUD/USD: Above 0.6300 on Good Friday holiday with eyes on China CPI
AUD/USD Forecast: Rally could continue
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 excessive, 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.