China’s Consumer Price Index (CPI) fell at an annual pace of 0.1% in March after a decline of 0.7% in February. The markets estimated an increase of 0.1% in the reported period.
Chinese CPI inflation -0.4% month -February -0.2% vs. -0.2% in March (MOM) deteriorated even worse than the expected -0.2% figure.
After a decline of 2.2% in February, China’s manufacturer price index (PPI) declined 2.5% year-to-year (YOY) in March. Data came below the market forecast of -2.3%.
Market response to China’s inflation data
At the time of writing, the AUD/USD pair is 0.54% a day to trade on 0.6120, which is slightly affected by Chinese disintegration.
Australian Dollar Faqs
One of the most important factors for 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 major driver is the price of its largest export, iron ore. The health of the Chinese economy, its largest business partner, is a factor, as well as inflation in Australia, its growth rate and business balance. Market spirit-Investors are taking more risky assets (risk-changes) or demanding safe-description (risk-closer)-this is also a factor, with the risk-on risk for Aud.
The Reserve Bank of Australia (RBA) affects the Australian Dollar (AUD) by determining the level of interest rates that Australian banks can lend to each other. This overall affects the level of interest rates in the economy. The main goal of RBA is to maintain a stable inflation rate of 2-3% by adjusting the interest rates up or down. Other major major central banks support relatively high interest rates AUD, and are contrast to relatively low. The RBA can also use quantitative spontaneity and tightening to affect the position of credit with pre-aud-negative and subsequent Aud-positive.
China is the largest trading partner in Australia, so the health of the Chinese economy is a major impact on the value of the Australian Dollar (AUD). When the Chinese economy is doing well, it raises the demand for more raw materials, goods and services, AUD, and further its value than Australia. Conversely, the case is when the Chinese economy is not growing rapidly as expected. Positive or negative surprise in Chinese development data, therefore, often has a direct impact on the Australian dollars and its pairs.
Iron ore is Australia’s largest exports, according to 2021 data, accounting for $ 118 billion per year, with China as its primary destination. Therefore, the price of iron ore can be the driver of the Australian dollar. Generally, if the price of iron ore increases, theres also increase, as the total demand for currency increases. If the price of iron ore falls, then the opposite is the case. High iron ore prices are also as a result of a more probability of a positive business balance for Australia, which is also positive for AUD.
The difference between the business balance, which earns from the export of a country, is the difference between what he pays for his import, another factor that can affect the value of the Australian dollar. If Australia makes excessive demand after export, its currency will receive purely value from surplus demand made from foreign buyers, which spends to buy vs. imports to buy its exports. Therefore, a positive net trade balance strengthens the AUD, if the business balance is negative, then with the opposite effect.
