News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
AUD Lower On Higher-Than-Expected Chinese Inflation And Soft Domestic Data

AUD Lower On Higher-Than-Expected Chinese Inflation And Soft Domestic Data

Jimmy Yang,

THE TAKEAWAY:Chinese inflation grows more than expected > PBOC could maintain current monetary policies >Market awaits FOMC minutes > AUD/USD Edges lower

The Australian Dollar traded lower against the US Dollar after inflation for China in June marked a 2.7% increase year-over-year and beat economists’ expectations of 2.5%. The Consumer Price Index tracks price changes in a basket of consumer goods and services and serves as a benchmark for measuring inflation. This higher-than-expected result may compel the People’s Bank of China to maintain their “prudent” — according to Governor Zhou in a statement on June 28th — monetary policy to control inflation. Amid recent liquidity problems and economic slowdown, ‘tight’ monetary policy could weigh on Chinese industries that drive demand for Australian exports, moving AUD/USD lower.

Other data released include a survey that reported deteriorating Australian business conditions but marginally improved sentiment. The NAB survey printed -8 from the previous -4 for conditions and 0 from -1 for confidence. These data could help the RBA determine future monetary policy, specifically if there is a need for a rate cut as they maintain their “scope for further easing” — a term used in their latest rate decision statement — which could also move the pair lower.

At the time of this writing, AUD/USD has recovered slightly from the earlier fall. These reports did not seem to have a significant impact on the pair as investors look toward the release of the Federal Open Market Committee’s June meeting minutes scheduled for Wednesday at 18:00 GMT and Federal Reserve Chairman Bernanke’s speech at 20:10 GMT. Rhetoric from these releases will likely influence investors' expectations on the Fed’s timetable for reductions in quantitative easing which could affect risk sentiment. A dovish tone could fuel risk appetite, pushing the pair higher whereas a hawkish one could lead investors to further unwind carry trades, weighing on AUD/USD.

AUD/USD (5-Minute Chart)

AUD_Lower_On_Higher-Than-Expected_Chinese_Inflation_And_Soft_Domestic_Data__body_Picture_1.png, AUD Lower On Higher-Than-Expected Chinese Inflation And Soft Domestic Data

Source: FXCM Marketscope

—Jimmy Yang, DailyFX Research Team

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES