AUD/USD remains on the defensive after China inflation data

AUD/USD remains in the red after mixed China inflation data.
The CPI ticked higher in May while the factory-gate inflation decelerated.
Aussie Dollar is not impressed by record highs in iron ore prices.

Omkar Godbole FXStreet Contributor

AUD/USD continues to trade in the red near 0.6955 following the mixed Chinese inflation figures.

The consumer price index (CPI) rose at annualized rate of 2.7% in May as expected, having risen by 2.5% in April.

Meanwhile, factory-gate prices or producer price inflation growth decelerated to 0.6% in May from 0.9% in April.

The People’s Bank of China has room for targeted rate cuts, according to China Securities Journal. However, a sustained uptick in the CPI will likely complicate matters for the central banks.

Further, the PPI deceleration is bad news for the commodity currencies like the AUD.

The AUD, therefore, risks extending losses during the day ahead. It is worth noting that the Aussie Dollar has come under pressure in Asia despite the 4% rally by China’s iron ore prices to hit new record highs. The commodity forms bulk of Australia’s exports.

Pivot levels

1. R3 0.6991
2. R2 0.6979
3. R1 0.6971
PP 0.6959
1. S1 0.695
2. S2 0.6938
3. S3 0.693

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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