Home AUD/USD’s recovery from session low stalls after weak China PPI
FXStreet News

AUD/USD’s recovery from session low stalls after weak China PPI

  • AUD/USD struggles to print gains as China reports a bigger-than-expected drop in PPI. 
  • Consumer inflation also rose at a slower pace in May.
  • Dismal Aussie Home Loans data could be adding to bearish pressures around the AUD.

AUD/USD’s recovery from the session low of 0.6933 looks to have stalled near 0.6960 following the release of the weaker-than-expected China producer price index (PPI). 

According to the National Bureau of Statistics, the PPI, which measures costs for goods at the factory gate, fell 3.7% year-on-year in May versus expectations for a 3.3% decline, having dropped by 3.1% in April. 

The deflation in factory-gate prices could be associated with the slowdown caused by the coronavirus outbreak and the resulting slump in global commodity prices. A weaker PPI, therefore, is bad news for the commodity-sensitive currency like the Australian dollar. 

The PPI data came along with the release of the consumer price index, which showed consumer inflation rose 2.4% year-on-year in May, missing the forecast for a 2.7% rise following April’s 3.3% gain. 

Apart from the weak PPI, the dismal domestic data seems to have put brakes on AUD’s recovery. The number of Home Loans fell by 4.4% in April, extending the 0.9% drop seen in March, the data released by the Australian Bureau of Statistics showed. The number indicates a declining level of consumer confidence in the housing sector and is a bearish development for the Aussie dollar. 

Even so, the AUD could rise during the day ahead if the risk assets put on a good show, erasing Tuesday’s decline. At press time, the futures tied to the S&P 500 are reporting a 0.5% rise. 

Technical levels

 

FX Street

FX Street

FXStreet is the leading independent portal dedicated to the Foreign Exchange (Forex) market. It was launched in 2000 and the portal has always been proud of their unyielding commitment to provide objective and unbiased information, to enable their users to take better and more confident decisions.