AUD/USD remains in the red after dismal China inflation data

AUD/USD is reporting moderate losses following the release of below-forecast China inflation numbers.
Overall, pricing pressures were contained. China, however, is unlikely to provide a flood-like stimulus. AUD, therefore, could remain under pressure.

Omkar Godbole FXStreet Contributor

China inflation data came in weaker-than-expected, offering little hope for the AUD bulls.

China's factory inflation or producer price index (PPI) rose 0.1 percent year-on-year in January, beating the estimated rise of 0.2 percent and down significantly from the previous month's print of 0.9 percent.

Meanwhile, the consumer price index (CPI) increased at an annualized rate of 1.7 percent in January, also missing the forecast of 1.9 percent growth.

While the sharp deceleration in the factory-gate inflation points to growing pressure on the world’s second-biggest economy, the soft CPI indicates that the People's Bank of China (PBOC) has room to ease monetary policy to shore up slowing growth.

That said, China recently ruled out a flood-like stimulus. As a result, the markets are unlikely to treat bad news as good news by buying up AUD and other risk assets.

As of writing, AUD/USD is trading at 0.7082, having hit a fresh session low of 0.7079 soon before press time.

Technical Levels

1. R3 0.7193
2. R2 0.7163
3. R1 0.7131
PP 0.7101
1. S1 0.707
2. S2 0.704
3. S3 0.7009

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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