China was impacted by the Covid-19 virus and a subsequent economic slump that dented its GDP growth by -6.8% year-on-year in the first quarter of 2020.

A strong bounce in yearly growth in the first quarter of this year would be expected to be supportive of AUD.

Description of the CPI

The Consumer Price Index is released by the National Bureau of Statistics of China. It is a measure of retail price variations within a representative basket of goods and services.

The result is a comprehensive summary of the results extracted from the urban consumer price index and rural consumer price index.

The purchasing power of the CNY is dragged down by inflation.

The CPI is a key indicator to measure inflation and changes in purchasing trends.

A substantial consumer price index increase would indicate that inflation has become a destabilizing factor in the economy, potentially prompting The People’s Bank of China to tighten monetary policy and fiscal policy risk.

Generally speaking, a high reading is seen as positive (or bullish) for the CNY, while a low reading is seen as negative (or Bearish) for the CNY.

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

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