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  • AUD/USD is reporting moderate losses following the release of below-forecast China inflation numbers.  
  • Overall, pricing pressures were contained. China, however, is unlikely to provide a flood-like stimulus. AUD, therefore, could remain under pressure.

China inflation data came in weaker-than-expected, offering little hope for the AUD bulls.  

China’s factory inflation or producer price index (PPI) rose 0.1 percent year-on-year in January, he estimated a rise of 0.2 percent and down significantly from the previous month’s print of 0.9 percent.  

Meanwhile, the consumer price index (CPI) increased at an annualized rate of 1.7 percent in January, also missing the forecast of 1.9 percent growth.  

While the sharp deceleration in the factory-gate inflation points to growing pressure on the world’s second-biggest economy, the soft CPI indicates that the People’s Bank of China (PBOC) has room to ease monetary policy to shore up slowing growth. That said, China recently ruled out a flood-like stimulus.  

Hence, the AUD and other China-sensitive assets are unlikely to pick up a strong bid. As of writing, AUD/USD is trading at 0.7082, having hit a fresh session low of 0.7079 soon before press time.  

Technical Levels