logo |

Information

Home   >     Industry    >     Main body

Strong China Consumer Price Index (CPI) to Fuel AUDUSD Rate Rebound

Abstract:Updates to Chinas Consumer Price Index (CPI) may fuel a larger rebound in AUDUSD as the headline reading is expected to pick up for the third consecutive month.

  Trading the News: China Consumer Price Index (CPI)

  Updates to Chinas Consumer Price Index (CPI) may fuel a larger rebound in AUDUSD as the headline reading for inflation is expected to pick up for the third consecutive month.

Image

  A CPI reading of 2.7% or higher may instill an improved outlook for the Asia/Pacific region even though the U.S. and China, Australias largest trading partner, struggle to reach a trade deal, and signs of a resilient economy may spark a bullish reaction in the Australian dollar as it encourages the Reserve Bank of Australia (RBA) to keep the official cash rate (OCR) on hold at the next meeting on July 2.

  However, a below-forecast CPI print may push the RBA to further insulate the economy as officials warn that “the downside risks stemming from the trade disputes have increased,” and Governor Philip Lowe and Co. may come under pressure to implement another rate cut sooner rather than later as the “latest set of forecasts were prepared on the assumption that the cash rate would follow the path implied by market pricing, which was for the cash rate to be around 1 per cent by the end of the year.”

  In turn, a print of 2.5% of lower may undermine the recent rebound in AUD/USD, with the Australian dollar at risk of facing a bearish reaction as the weakening outlook for the Asia/Pacific region boosts bets for another RBA rate cut.

  Impact that Chinas CPI had on AUD/USD during the previous release

Period Data Released Estimate Actual Pips Change (1 Hour post event ) Pips Change (End of Day post event)
APR 2019 05/09/2019 01:30:00 GMT 2.5% 2.5% -4 +12

  April 2019 China Consumer Price Index (CPI)

  AUD/USD 5-Minute Chart

Image

  Chinas Consumer Price Index (CPI) increased for the second consecutive month in April, with the headline reading climbing to 2.5% from 2.3% per annum in March. The Produce Price Index (PPI) showed a similar dynamic, with the reading widening to 0.9% from 0.4% during the same period.

  The Australian dollar nudged higher following the pickup in China inflation, but the reaction was short-lived, with AUDUSD largely consolidating throughout the day to close at 0.6989. Learn more with the DailyFX Advanced Guide for Trading the News.

  AUD/USD Rate Daily Chart

Image
  •   Keep in mind, the AUDUSD rebound following the currency market flash-crash has been capped by the 200-Day SMA (0.7118), with the exchange rate marking another failed attempt to break/close above the moving average in April.

  •   In turn, AUDUSD remains at risk of giving back the rebound from the 2019-low (0.6745) as the wedge/triangle formation in both price and the Relative Strength Index (RSI) unravels.

      {13}

  •   Downside targets coming back on the radar for AUDUSD as the recent advance fails to spur a run at the May-high (0.7061), with the near-term outlook capped by the 0.7020 (50% expansion) region.

      {13}

  •   Waiting for a break/close below the 0.6950 (61.8% expansion) pivot to open up the Fibonacci overlap around 0.6850 (78.6% expansion) to 0.6880 (23.6% retracement), with the next region of interest coming in around 0.6730 (100% expansion).

  •   Will keep a close eye on the RSI as it flashes a bearish signal, with the oscillator finally snapping the upward trend carried over from the previous month.

Latest News

United States Dollar

  • United Arab Emirates Dirham
  • Australia Dollar
  • Canadian Dollar
  • Swiss Franc
  • Chinese Yuan
  • Danish Krone
  • Euro
  • British Pound
  • Hong Kong Dollar
  • Hungarian Forint
  • Japanese Yen
  • South Korean Won
  • Mexican Peso
  • Malaysian Ringgit
  • Norwegian Krone
  • New Zealand Dollar
  • Polish Zloty
  • Russian Ruble
  • Saudi Arabian Riyal
  • Swedish Krona
  • Singapore Dollar
  • Thai Baht
  • Turkish Lira
  • United States Dollar
  • South African Rand

United States Dollar

  • United Arab Emirates Dirham
  • Australia Dollar
  • Canadian Dollar
  • Swiss Franc
  • Chinese Yuan
  • Danish Krone
  • Euro
  • British Pound
  • Hong Kong Dollar
  • Hungarian Forint
  • Japanese Yen
  • South Korean Won
  • Mexican Peso
  • Malaysian Ringgit
  • Norwegian Krone
  • New Zealand Dollar
  • Polish Zloty
  • Russian Ruble
  • Saudi Arabian Riyal
  • Swedish Krona
  • Singapore Dollar
  • Thai Baht
  • Turkish Lira
  • United States Dollar
  • South African Rand
Current Rate  :
--
Amount
United States Dollar
Amount
-- United States Dollar
Warning

Please ignore this e-mail if you have not registered for WikiFX membership; Of course, you are cordially invited to become WikiFX member.

Given the complexity of forex industry, some brokers are issued legal licenses by regulation institutes by cheating. If the data published by WikiFX are not in accordance with the fact, please use Complaints and Correction function to inform us. We will check immediately and publish the results.

Foreign exchange, precious metals and over-the-counter (OTC) contracts are leveraged products, which have high risks and may lead to losses of your investment principal. Please invest rationally.

Special Notice: Information provided by WikiFX is only for reference and does not indicate any investment advice. Investors should choose brokers by themselves. The risk involved with brokers is not relevant with WikiFX. Investors shall bear the relevant consequences and responsibilities on his own.

×

Select Country/District