Falling commodities prices, especially in iron ore last month, likely to add further downward pressure on China inflation in this period, Fullerton Markets analysis shows.

  • China's consumer price index (CPI) rose 1.2 percent in April from a year earlier, in line with the median forecast; while the producer price index (PPI) was up 6.4 percent, below earlier forecasts at 6.8 percent.
  • As we mentioned yesterday, China PPI y/y changes, has been moving in line with Aussie in most of the time. Aussie has been moving in a downtrend since early March when China intensified the rulings on is housing curbs.
  • There is no sign that Chinese authorities have any intention to boost pro-growth measures, thus Aussie’s downside likely to be further increased.
  • Next support level for AUD/USD at 0.73, the pair likely to test this level as long as no big selling in U.S. dollar.

 

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Fullerton Markets Research Team

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