China’s consumer price index (CPI) rose 1.0% in March from a year ago, after rising 1.3% in February, China’s National Bureau of Statistics said on Friday. The market consensus in the period in question was 1.2%.
CPI inflation in China amounted to -0.7% m/m in March, compared to an escalate of 1.0% earlier, which is less than the expected decline of 0.2%.
China’s producer price index (PPI) rose by 0.5% y/y in March, after falling by 0.9% in February. The data was above the market consensus of an escalate of 0.4%.
Market reaction to CPI and PPI data in China
China’s CPI and PPI data have little or no impact on the Chinese Australian Dollar (AUD). At press time, AUD/USD was down 0.09% on the day to 0.7077.
Today’s Australian dollar price
The table below shows the current percentage change of the Australian Dollar (AUD) against the major listed currencies. The Australian dollar was the weakest against the US dollar.
| USD | EUR | GBP | JPY | BOOR | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.07% | 0.08% | 0.06% | 0.05% | 0.09% | 0.13% | 0.06% | |
| EUR | -0.07% | 0.00% | 0.00% | -0.03% | 0.01% | 0.06% | -0.01% | |
| GBP | -0.08% | -0.01% | 0.00% | -0.02% | 0.02% | 0.05% | -0.03% | |
| JPY | -0.06% | 0.00% | 0.00% | -0.02% | 0.03% | 0.02% | -0.05% | |
| BOOR | -0.05% | 0.03% | 0.02% | 0.02% | 0.03% | 0.07% | -0.01% | |
| AUD | -0.09% | -0.01% | -0.02% | -0.03% | -0.03% | 0.04% | -0.05% | |
| NZD | -0.13% | -0.06% | -0.05% | -0.02% | -0.07% | -0.04% | -0.08% | |
| CHF | -0.06% | 0.01% | 0.03% | 0.05% | 0.00% | 0.05% | 0.08% |
The heat map shows the percentage changes of the major currencies relative to each other. The base currency is selected from the left column and the quote currency from the top row. For example, if you select Australian Dollar from the left column and move along the horizontal line to US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
This section was published on April 9 at 23:29 GMT as a preview of China’s CPI and PPI data.
Overview of CPI, PPI in China
China’s National Bureau of Statistics (NBS) will release its data for March at 01:30 GMT. The Consumer Price Index (CPI) is expected to escalate by 1.2% y/y in March compared to 1.3% in February. The producer price index (PPI) is forecast to escalate by 0.4% y/y in March, compared to a decline of 0.9% in the previous year.
CPI is a key indicator measuring inflation and changes in purchasing trends. A y/y reading compares prices in a reference month with the same month a year earlier. Meanwhile, PPI is a measure of the rate of inflation experienced by producers.
How can CPI and PPI in China affect AUD/USD?
AUD/USD rates are trading negative on the eve of the publication of CPI and PPI data in China. The pair is losing value as market uncertainty persists over the fragility of the U.S.-Iran ceasefire, boosting demand for safe-haven currencies such as the U.S. dollar (USD).
If the data is better than expected, it could push the Australian dollar (AUD) higher, with the first barrier to growth seen at the April 9 high of 0.7095. The next resistance level appears at the February 26 high of 0.7143. An additional growth filter worth watching is the March 11 peak at 0.7188.
On the other hand, a psychological level of 0.7000 will provide buyers with some comfort. Prolonged losses could result in a decline to the February 5 low of 0.6927 and then the 100-day exponential moving average (EMA) of 0.6880.
Australian Dollar FAQs
One of the most essential factors for the Australian dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). As Australia is a resource-rich country, another key factor influencing price is the price of its largest export, iron ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as Australia’s inflation, its dynamics and its trade balance. Market sentiment – whether investors take on riskier assets (risk-on) or look for unthreatening havens (risk-off) – also matters, with positive risk for the AUD.
The Reserve Bank of Australia (RBA) influences the Australian dollar (AUD) by setting the interest rates that Australian banks can lend to each other. This affects the level of interest rates throughout the economy. The RBA’s main goal is to maintain a stable inflation rate of 2-3% by raising or lowering interest rates. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low ones. The RBA may also employ quantitative easing and tightening to influence lending conditions, the former being AUD negative and the latter AUD positive.
China is Australia’s largest trading partner, so the health of the Chinese economy has a major impact on the value of the Australian dollar (AUD). When the Chinese economy does well, it buys more raw materials, goods and services from Australia, increasing demand for the AUD and increasing its value. The opposite is the case when the Chinese economy is not growing as swift 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, worth $118 billion a year in 2021 figures, with China being the main buyer. The price of iron ore can therefore influence the Australian dollar. Generally speaking, if the price of iron ore increases, the AUD also increases, as aggregate demand for the currency increases. The opposite is true when 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 for the AUD.
The trade balance, or the difference between what a country earns from exports and what it pays for imports, is another factor that can affect the value of the Australian dollar. If Australia produces a highly sought after export, then its currency will only appreciate in value as a result of the excess demand created by foreign buyers wanting to buy its exports compared to spending on import purchases. Therefore, a positive net trade balance strengthens the AUD, and the effect is opposite if the trade balance is negative.
