China: Reflation continues, but the recovery needs to spread out – HSBC

Sandeep Kanihama FXStreet Contributor

Julia Wang, Research Analysts at HSBC, notes that China’s December PPI inflation came in higher-than-expected at 5.5% y-o-y and the upside surprise was largely due to the surge in oil prices towards year-end, which translated into significant price gains in oil and energy sectors.

Key Quotes

“Heavy industries also continue to post double-digit price increases. The industrial sector has been reflating over the past year, and the pace has accelerated towards year-end. But so far there is little sign of this spreading to the non-industrial part of the economy, which accounts for over two-thirds of GDP.”

“Headline CPI came in weaker due to easing food prices, while core CPI inflation was flat. A better policy mix, focusing on reviving private sector investment, as well as more market-based supply side adjustment will help to broaden the base of the recovery, and make it more sustainable in 2017. Until we see more signs of broad-based rise in inflation pressures, the PBoC should have good reasons to keep policy unchanged.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

EUR/USD risks a deeper drop below 1.1750

EUR/USD keeps its vacillating mood in place as the the NA session drwas to a close on Tuesday, hovering below the 1.1800 hurdle amid acceptable gains in the US Dollar. In the meantime, market participants and the FX galaxy are expected to closely follow President Trump’s SOTU speech around 2AM GMT.

GBP/USD regains 1.3500 and above

GBP/USD extends its advance for the third day in a row on Tuesday, this time retesting the area beyond the 1.3500 hurdle. Cable’s uptick comes despite decent gains in the Greenback and the dovish message from the BoE’s Bailey at the UK Parliament.

Gold appears offered around $5,150

Gold is giving back a good portion of the recent multi-day rally, receding to the $5,150 zone per troy ounce amid the decent bounce in the US Dollar and mixed US Treasuty yields. In the meantime, markets’ attention remain on upcoming comments from Fed speakers.

Australia CPI to highlight persistent price pressures, backing a hawkish outlook

Australia will release its key set of inflation figures for the month of January on Wednesday, with the Consumer Price Index expected to rise by 3.7%, slightly lower than the 3.8% in the last month of 2025.

The Citrini report: How a debatable AI narrative can shake Wall Street

That AI-related headline alone was enough to rattle investors.US stocks slid sharply on Monday after a widely circulated Citrini Research memo outlined a hypothetical “2028 Global Intelligence Crisis”, warning that rapid AI adoption could push US unemployment into double digits as early as by mid-2028.

XRP pressured by weak ETF flows and declining retail interest

Ripple (XRP) is edging lower, trading above its intraday low of $1.32 at the time of writing on Tuesday. The decline from its weekly opening of $1.39 reflects heightened volatility in the broader cryptocurrency market, accentuated by tariff-triggered uncertainty.