AUDUSD at Risk as China Offers No Stimulus Details, Despite Falling Chinese Inflation
The decline in AUDUSD ended after a 2.5 cent fall and started to rebound late last week, but the upside seems weak and it is under threat.
The decline in AUDUSD ended after a 2.5-cent fall and started to rebound late last week, but the bullish momentum seems weak and it is under threat. Over the weekend, the CPI consumer inflation and PPI producer inflation from China showed a decline, while Chinese officials didn’t offer much regarding further stimulus details, which doesn’t help the situation for risk assets, such as commodity dollars.
Earlier this month, the AUD/USD saw a sharp reversal, falling over two cents and dropping to around 0.67. This decline was triggered by bearish signals, including hammer and doji candlestick patterns, which pointed to a weaker Aussie dollar. Risk-sensitive currencies ultimately closed the week lower, as a strengthening USD capped any recovery attempts.
AUD/USD Chart Daily – MAs Held As Support in the First Attempt
Despite the downturn, the daily chart shows AUD/USD found support at a convergence of moving averages, which helped it to begin a recovery last week. The USD’s strength was bolstered by the Federal Reserve’s cautious stance on future rate cuts, coupled with robust U.S. employment data. These factors decreased the likelihood of a 50 basis point rate cut at the November Fed meeting. While U.S. inflation indicators, specifically PPI and CPI, came in higher, they weren’t strong enough to sustain the USD’s bullish run. Consequently, the AUD/USD rebounded by around 50 pips, but overall, the bullish momentum for risk currencies remains weak, particularly due to concerns about China.
China’s Fiscal Policy Developments
On Saturday, China’s Finance Minister Lan Fo’an held a highly anticipated press conference, aiming to provide clarity on potential fiscal policy adjustments. While the market was hoping for detailed stimulus measures, the conference fell short of expectations. Instead of specific plans, officials emphasized China’s borrowing capacity and the intention to “significantly increase” debt. They also mentioned that additional measures are under review, but any concrete policy changes are likely to be announced in upcoming legislative sessions.
This lack of immediate action leaves markets wondering whether they can remain patient. The effect of China’s fiscal strategy on commodity markets and commodity-linked currencies will be in focus this week as traders assess the potential impacts.
China CPI and PPI Inflation Data – Key Points for September
Consumer Price Index (CPI) YoY:
- September CPI year-over-year rate declined to -2.8%, compared to -2.5% expected.
- This marks a further decline from August’s YoY CPI of -1.8%, indicating a continued deflationary trend.
- Consumer Price Index (CPI) MoM:
- September CPI month-over-month remained flat at 0.0%, below the anticipated 0.4% increase.
- In contrast, August’s CPI MoM was 0.4%, highlighting a stall in consumer price growth.
Producer Price Index (PPI) Inflation YoY:
- September PPI inflation was reported at 0.4%, lower than the forecasted 0.6%.
- This follows August’s PPI inflation, which also recorded 0.6%, indicating a slight moderation in producer price inflation.
AUD/USD Live Chart
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