When is China's CPI/PPI, and how could it affect the AUD/USD?

China CPI/PPI overview

Monday at 01:30 GMT sees the latest installment of China's CPI and PPI, and Asia-session traders will be bracing for a mixed release, with China's latest inflation expected to tick upwards while PPI is seen contracting slightly. Annual CPI into August is seen at 2.2% versus the previous period's 2.1%, with August's m/m CPI expected at 0.5% (last 0.3%), while August's y/y PPI is expected to decline slightly to 4.0%, compared to the previous 4.6%. Trade tensions amidst the US-China trade war are exposing the AUD/USD to continued shortside pressures in knock-on volatility, and investors will be keeping a close eye on today's release, looking for signs that the deepening trade rift is beginning to force a downturn in the Chinese economy, which would see a sharp impact on Australia's domestic economy. Tensions are rising in the US-China showdown, especially after China's trade surplus with the US hit a record high recently.

How could it affect the AUD/USD?

With bearish pressures holding steady and keeping the Aussie capped in a downward spiral, bulls who have been kept on the bench may be looking for an opportunity to spark a bullish correction; as FXStreet's own Yohay Elam noted in his AUD/USD analysis, there could still be plenty of room for the AUD/USD to mark in new lows for 2018: "the bears are in control. The AUD/USD is trading below the Simple Moving Averages for 50 and 200 days. Momentum is to the downside and the Relative Strength Index is down but remains above 30, thus not reflecting oversold conditions. 

0.7150 was a support line back in December 2016. Despite a dip below this level, it remains relevant. 0.7050 was support back in February 2016 and it is closely followed by the round number of 0.70. Even lower, 0.6900 and 0.6820 from early 2016 come into play. 

0.72 was a swing low in mid-August and switch positions. 0.7230 was a support line later in the month. The 0.7310 level dates back to early July when it served as support. 0.7370 was a line of resistance in mid-August."

Key notes

AUD/USD Forecast: Free falling and the end is not near

AUDUSD Analysis: Pressured by 55– and 100-hour SMAs

AUD/USD analysis: US-China tensions undermine Aussie

About China 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 purchase 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.

About China PPI

The Producer Price Index released by the National Bureau of Statistics of China is a measurement of the rate of inflation experienced by producers. It captures the average changes in prices received by Chinese domestic producers of commodities in all stages of processing (crude materials, intermediate materials, and finished goods). Changes in the PPI are widely considered as an indicator of commodity inflation. If the Producer Price Index increase is excesive, it would indicate that inflation has become a destabilizing factor in the economy, The People’s Bank of China would tighten monetary policy and fiscal policy risk. Generally speaking, a high reading is seen as positive (or bullish) for the CNY, whereas a low reading is seen as negative (or bearish) for the CNY.