Above-forecast China inflation readings fail to lift AUD/USD
|- China producer price index (PPI) and consumer price index (CPI) bettered estimates, but have failed to put a bid under the AUD.
- Escalating US-China trade tensions are likely keeping the AUD under pressure.
The Aussie market remains offered despite a better-than-expected China inflation numbers.
At press time, the AUD/USD pair is trading at 0.7417, having faced rejection at the 50-day moving average (MA) resistance of 0.7439 earlier today.
China PPI or factory-gate inflation for July came in at 4.6 percent year-on-year, beating the forecast of 4.3 percent, but narrowly missed the previous month's print of 4.7 percent. Meanwhile, the CPI rose 2.1 percent year-on-year, beating the estimates of 1.9 percent.
A better-than-expected China factory-gate inflation usually bodes well for commodities and currencies like AUD. However, so far the AUD has not picked up a bid, possibly due to escalating US-China trade tensions.
The US and China have imposed a new wave of tariffs in the last 24 hours. The tit-for-tat measures mean there are levies on $50bn of goods moving each way between the two countries, according to Reuters.
Looking ahead, the currency pair may suffer deeper losses if the Chinese yuan resumes the downtrend. Technically speaking, only a daily close above 0.7490 would confirm a bullish reversal.
AUD/USD Technical Levels
Resistance: 0.7439 (50-day MA), 0.7490 (falling trendline hurdle as per the daily chart), 0.7525 (100-day MA)
Support: 0.7405 (10-day MA), 0.7348 (Aug. 3 low), 0.73 (psychological support)
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