Forex Marketz Daily Forex News – Fully Markets Update
This morning the financial markets got a look into Chinese inflation data. The Australian dollar, including the benchmark AUD/USD Forex market shrugged the data off.
China’s official consumer price index (CPI) for December was up 1.8 percent annually. This was just below the expected 1.9 percent and above November’s 1.7 percent print. Food prices were lower this month while the nonfood prices were higher. Producer prices, producer price index, was up 4.9 percent. This was above the 4.8 percent the markets were looking for.
There was nothing in these big about this data to suggest that China came into a new year facing a marked increase with inflation or a contraction. China’s economy is still on track to hit its official growth target of “6.5 percent or better” for 2017.
It’s important to bear in mind that growth will still be at a near 30 year low. However, the lower but better quality growth is better for China. It is more sustainable prospect than the double digit growth spurs seen in previous years.
Australian Dollar Ignores Chinese Data
The Australian dollar is often the Forex market liquid proxy to Chinese economic data. The Down Under exports a great deal of raw material to the Chinese market. Today the Australian dollar barely budged on the inflation data. The numbers came in close to expectations and were not stellar nor poor.
The last round of domestic data for the Australian dollar, housing starts beat expectations, widely, and the Forex markets sent the AUD higher. However, the Reserve Bank of Australia is no rush to change its monetary policy.
The Australian Dollar’s yield advantage is being eroded by Federal Reserve rate hikes as Australian rates are staying at their 1.50% record low. This should cap future gains and keep the Aussie under pressure.
