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  • China’s April PPI bettered estimates, signaling the economy may have bottomed out.
  • The Aussie Dollar remains on the defensive despite upbeat China data, possibly due to simmering trade tensions.

A better-than-expected China’s producer price inflation (PPI) released soon before press time is struggling to put a bid under the Australian dollar, a proxy for China.

The PPI or factory-gate prices rose 0.9% year-on-year in April, beating the forecasted rise of 0.6%, after having increased by 0.4% in March. Meanwhile, the consumer price inflation rose 2.5% year-on-year, as expected.

An above-forecast PPI number validates the argument that the economy has stabilized over the recent months and will likely ease deflation fears.

So far, however, the data has had little impact on the AUD/USD. The currency pair continues to trade in the red near the pre-data level of 0.6980.

Aussie’s failure to cheer China’s upbeat factory-gate inflation could be associated with heightened US-China trade tensions and the resulting risk aversion. As of writing, the futures on the S&P 500 are reporting a 0.30% drop.

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