Breaking: China’s CPI inflation rises to 0.7% YoY in November, as expected
China’s Consumer Price Index (CPI) rose 0.7% in November from a year ago after arriving at an increase of 0.2% in October, the National Bureau of Statistics of China reported on Wednesday. The market consensus was for 0.7% in the reported period.
Chinese CPI inflation arrived at -0.1% MoM in November versus a rise of 0.2% prior.
China’s Producer Price Index (PPI) dropped 2.2% YoY in November, following a 2.1% fall in October. The data came in worse than the market consensus of -2.0%.
Market reaction to China’s CPI, PPI data
At the press time, the AUD/USD pair is down 0.08% on the day to trade at 0.6635.
Australian Dollar Price Last 7 Days
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies last 7 days. Australian Dollar was the weakest against the Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.00% | -0.65% | 0.60% | -0.90% | -1.04% | -0.55% | 0.43% | |
| EUR | -0.00% | -0.65% | 0.56% | -0.90% | -1.05% | -0.56% | 0.42% | |
| GBP | 0.65% | 0.65% | 1.25% | -0.25% | -0.40% | 0.09% | 1.08% | |
| JPY | -0.60% | -0.56% | -1.25% | -1.49% | -1.63% | -1.15% | -0.17% | |
| CAD | 0.90% | 0.90% | 0.25% | 1.49% | -0.15% | 0.35% | 1.34% | |
| AUD | 1.04% | 1.05% | 0.40% | 1.63% | 0.15% | 0.50% | 1.49% | |
| NZD | 0.55% | 0.56% | -0.09% | 1.15% | -0.35% | -0.50% | 0.98% | |
| CHF | -0.43% | -0.42% | -1.08% | 0.17% | -1.34% | -1.49% | -0.98% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
This section was published on Tuesday at 23:034 GMT as a preview of China’s CPI, PPI data.
China’s CPI, PPI Overview
The National Bureau of Statistics of China (NBS) will publish its data for November at 01.30 GMT. The Consumer Price Index (CPI) is expected to show a rise of 0.7% YoY in November, compared to 0.2% in October. The Producer Price Index (PPI) is projected to show a decline of 2.0% in November versus a fall of 2.1% prior.
The CPI is a key indicator to measure inflation and changes in purchasing trends. The YoY reading compares prices in the reference month to the same month a year earlier. Meanwhile, the PPI is a measurement of the rate of inflation experienced by producers.
How could the China’s CPI, PPI affect AUD/USD?
AUD/USD trades on a positive note on the day in the lead up to China’s CPI, PPI data. The pair edges higher after the Reserve Bank of Australia (RBA) decided to hold its Official Cash Rate (OCR) steady at 3.6% following the conclusion of the December monetary policy meeting on Tuesday. Markets might turn cautious ahead of the US Federal Reserve (Fed) interest rate decisions later on Wednesday.
If data comes in better than expected, it could lift the Australian Dollar (AUD), with the first upside barrier seen at the September 16 high of 0.6688. The next resistance level emerges at the September 17 high of 0.6707, en route to the July 12, 2024 high of 0.6793.
To the downside, the December 5 low of 0.6605 will offer some comfort to buyers. Extended losses could see a drop to the December 3 low of 0.6552, followed by the 100-day EMA of 0.6530.
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
Author
Lallalit Srijandorn
FXStreet
Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.
