AUD/USD keeping gains despite dismal China PPI data

AUD/USD remains bid despite China's PPI falling by 1.2% in September.
The PBOC has less room to deliver stimulus due to the elevated CPI.

Omkar Godbole FXStreet Contributor

AUD/USD continues to trade in green even though the data released soon before press time showed China's Producer Price Inflation or factory gate prices declined in September.

The PPI came in at -1.2%, as expected, having dropped by 0.8% in August. The PPI is one gauge of corporate profitability and the contraction indicates the investment and employment have come under pressure, possibly due to the ongoing trade war with the US.

Even so, the AUD, a proxy for China, is showing resilience. The AUD/USD pair is currently trading at session highs near 0.6785, representing modest gains on the day. The currency pair has barely moved following the release of China's inflation data.

The PPI data will likely stoke deflation worries, putting pressure on the People's Bank of China (PBOC) to deliver more stimulus. The central bank, however, may have a tough time delivering stimulus due to elevated consumer prices.

The consumer price inflation for September came in at 3%, beating the forecast of 2.9% rise and up from the preceding month's 2.8% reading.

As a result, the AUD could come under pressure during the day ahead, especially if the equities respond negatively to the dismal PPI reading.

Technical levels

AUD/USD

Overview
Today last price	0.6787
Today Daily Change	0.0011
Today Daily Change %	0.16
Today daily open	0.6776

Trends
Daily SMA20	0.6763
Daily SMA50	0.6778
Daily SMA100	0.6864
Daily SMA200	0.6978

Levels
Previous Daily High	0.6802
Previous Daily Low	0.675
Previous Weekly High	0.6811
Previous Weekly Low	0.6704
Previous Monthly High	0.6895
Previous Monthly Low	0.6687
Daily Fibonacci 38.2%	0.677
Daily Fibonacci 61.8%	0.6782
Daily Pivot Point S1	0.675
Daily Pivot Point S2	0.6724
Daily Pivot Point S3	0.6698
Daily Pivot Point R1	0.6802
Daily Pivot Point R2	0.6828
Daily Pivot Point R3	0.6854

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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