When is China CPI/PPI data and how could they affect AUD/USD?

China CPI/PPI overview

Early Tuesday around 01:30 GMT, the market sees April month headline inflation numbers from China, namely the Consumer Price Index (CPI) and the Producer Price Index (PPI). China’s annualized CPI reading is expected to drop from 4.3% to 3.7% with PPI YoY likely declining to -2.6% versus -1.5% earlier. On the MoM basis, CPI bears the forecast to recover from -1.2% prior fall to -0.5%.

Also likely to offer direction to the AUD/USD will be the April month Business Confidence and Business Conditions data from the National Australia Bank (NAB). The releases will be out together with the Chinese inflation figures and registered -66 and -21 respective priors for the Business Confidence and Business Conditions.

While the currently active trade war fears seem to gain a bit more of market players’ attention, traders will look for a positive surprise from China considering the nation’s early economic restart.

TD Securities follow the market consensus of downbeat readings:

Inflation is likely to soften further as some COVID-19 related price pressures ease and food prices weaken. Another sharp fall in pork prices is likely, helping to drive down overall inflation while energy prices are also likely to have dropped. We expect an outsized 0.6% m/m drop in CPI in March, with y/y CPI likely to fall to 3.6% (market expectations 3.7%).

How could they affect the AUD/USD?

Following the recent pullback in Aussie, from the monthly top of 0.6562 to currently around 0.6450, the pair traders are looking for any improvement in the Chinese figures for a fresh pullback. However, considering the drop in inflation constituents and the looming trade war fears, not only relating to the US-China but also considering the Aussie-China, the pair may keep the sellers hopeful. Additionally, extremely negative data might not refrain from challenging the three-week-old support, currently around 0.6407.

Key Notes

AUD/USD awaits China CPI to take-out 0.6500

AUD/USD Forecast: Bulls pause ahead of Australian data

About China CPI

The Consumer Price Index is released by the National Bureau of Statistics of China. It is a measure of retail price variations within a representative basket of goods and services. The result is a comprehensive summary of the results extracted from the urban consumer price index and rural consumer price index. The purchase power of the CNY is dragged down by inflation. The CPI is a key indicator to measure inflation and changes in purchasing trends. A substantial consumer price index increase would indicate that inflation has become a destabilizing factor in the economy, potentially prompting The People’s Bank of China to tighten monetary policy and fiscal policy risk. Generally speaking, a high reading is seen as positive (or bullish) for the CNY, while a low reading is seen as negative (or Bearish) for the CNY.

About China PPI

The Producer Price Index released by the National Bureau of Statistics of China is a measurement of the rate of inflation experienced by producers. It captures the average changes in prices received by Chinese domestic producers of commodities in all stages of processing (crude materials, intermediate materials, and finished goods). Changes in the PPI are widely considered as an indicator of commodity inflation. If the Producer Price Index increase is excessive, it would indicate that inflation has become a destabilizing factor in the economy, The People’s Bank of China would tighten monetary policy and fiscal policy risk. Generally speaking, a high reading is seen as positive (or bullish) for the CNY, whereas a low reading is seen as negative (or bearish) for the CNY.