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AUD/USD Little Changed as Chinese CPI Grows Most in 7 Months

AUD/USD Little Changed as Chinese CPI Grows Most in 7 Months

Daniel Dubrovsky, Strategist

Talking Points:

  • The Australian Dollar was quiet as Chinese CPI and PPI figures were released
  • Consumer prices increased 2.3% y/y versus 2.2% estimated, a 7-month high
  • In wake of poor Australian data, investors may turn to next week’s jobs report

How well have DailyFX analysts’ Q4 forecasts measured up with what markets actually did?Take a look here!

The Australian Dollar showed a relatively tame reaction against its major peers after Chinese CPI and PPI figures crossed the wires. In November, consumer prices increased 2.3 percent versus 2.2% expected and 2.1% in October. Today’s reading had two significant portions to it. First, the 2.3% growth was the fastest since March, a 7-month high. Second, November marked a third month of price acceleration relative to the prior month.

In addition to consumer prices, wholesale inflation gained 3.3 percent versus 2.3% estimated and 1.2% in October. This marks the quickest growth since October 2011, a 5-year high. The PPI figures have been accelerating for 11 consecutive months.

Analysts were expected non-food inflation to boost overall price growth on stronger domestic demand and firmer producer costs. In addition, economists were expecting PPI to increase on early signs that commodities are on a rising trend again.

With inflation slowly edging up to the PBOC’s 3 percent target, the markets' lackluster response may suggest traders expect the policy status quo to persist for now. Since China is Australia’s largest trading partner, economic news-flow from the former country often implies knock-on effects on the latter, triggering a response from the currency.

Given this week’s worse-than-expected Australian GDP and trade balance figures, next week’s jobs report could be in the spotlight for RBA rate cut speculation. Economists are expecting that the country will gain 17,500 positions.

AUD/USD Little Changed as Chinese CPI Grows Most in 7 Months

Chart compiled using TradingView

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