Chinese CPI/PPI Preview - What to Expect in AUD/USD?
AUD/USD has been in a wide phase of consolidation of the bullish recovery this year so far of the 2015 downtrend.
0.7700
has proven to an area too far, however, but the bulls are battling on
in a volatile commodities climate and support has been established at
the 0.75 level. For today, we have the next set of key Chinese data
coming out today, kicking of what could be the start to a key and busy
week ahead.
CPI expectations
The Chinese
CPI for March will be released at 11:30am Syd/9:30am local. Analysts at
Westpac are expecting for this number to tick up to 2.4% y/y though
explained that growth remains the focus of monetary policy. At the same
time, PPI is expected to continue to reflect low commodity prices. While
inflation is not usually a big mover as markets focus on the nations
manufacturing and trade balances in a climate where there is big focus
on the commodities sector.
PBoC and the 3% 2016 CPI annual target
Markets
pay attention to the CPI data as this is watched closely by the PBoC
because should the annual CPI reading more too far below or beyond the
Chinese government's target levels, the PBoC could act at the next rate
decision, and that would create a major impact on markets. So, the
official CPI target for 2016 is set at 3%, so the expectations are going
to be at the low end of the potential band's higher end for the year.
Either way, AUD/USD could be a mover around the data and at the same
time there is home loans data.
AUD/USD levels to monitor
The
current price action is signalling the potential for a correction lower
taking hold near term. A series of downside fundamentals would help the
bearish technical case, and a break of 0.7500 opens 0.7477, recent last
week's low ahead of 0.7416 (16th March low). The October and November
highs are an area of interest beyond that located at 0.7384/81. To the
upside, the 20 dma is located at 0.7576 and a break there brings us to
the 0.7600 handle with congestion at R3 0.7643 before 0.7680 and the
recent challenge of 0.7720/50.
(Market News Provided by FXstreet)
