Showing posts with label CPI. Show all posts
Showing posts with label CPI. Show all posts
Sunday, September 12, 2010
AUD/USD Gaps Up 37 Pips in Early Sunday Trading
The initial 37 pip AUD/USD gap up on the open of Sunday forex trading today seems to be in line with bullish Chinese economic data. Some traders are wary though of a possible rate hike to curb inflation. It remains to be seen how policy makers will react, e.g. if they consider the 3.5% CPI (inflation rate) in August to be somewhat of a one-time outlier due to food inflation caused by floods/crop destruction or if they foresee a greater inflationary trend.
Saturday, September 11, 2010
Early Release China Data Favorable to Global Risk Appetite but Traders Might be Cautious of Rate Hike
Overall bullish August Chinese economic figures released after the US market close on Friday (Saturday in China) showed expanding M2 money supply (loan growth) as well as better than expected industrial production and a 3.5% CPI rate (mostly due to food inflation caused by the disrupted shipping and destroyed crops from flooding). [1, 5] 1.7% of the CPI figure results from the food component. [4]
However, the deposit savings rate in banks can not keep up with inflation (the one year deposit rate is 2.25%) so there is a call by some for the government to raise the deposit rate so that savers do not have a negative return.[2, 3] This might cause traders to be wary of some sort of rate hike announcement next week.
I have therefore switched to a bullish stance on the AUD/USD for now, unless there is some sort of enormous rate hike announcement by the PBOC, which seems unlikely since the August inflation announcement might be considered an outlier due to the floods.
Sources:
_______________________________________________________________
1. UPDATE 2-China economy shows inner strength in buoyant data
Zhou Xin and Simon Rabinovitch, Reuters
2. China Should Raise Deposit Rates, Business Journal Cites PBOC Adviser
Huang Zhe, Bloomberg
3. China PBOC Mon. Pol. Panel Member Calls For Rate Hike: Press
iMarketNews.com
4. China Data Wrap: Economy Powers Along, Despite Global Woes
iMarketNews.com
5. China Aug M2 growth up 19.2 pct y/y, above forecast
Eileen Wang and Simon Rabinovitch, Reuters
However, the deposit savings rate in banks can not keep up with inflation (the one year deposit rate is 2.25%) so there is a call by some for the government to raise the deposit rate so that savers do not have a negative return.[2, 3] This might cause traders to be wary of some sort of rate hike announcement next week.
I have therefore switched to a bullish stance on the AUD/USD for now, unless there is some sort of enormous rate hike announcement by the PBOC, which seems unlikely since the August inflation announcement might be considered an outlier due to the floods.
Sources:
_______________________________________________________________
1. UPDATE 2-China economy shows inner strength in buoyant data
Zhou Xin and Simon Rabinovitch, Reuters
2. China Should Raise Deposit Rates, Business Journal Cites PBOC Adviser
Huang Zhe, Bloomberg
3. China PBOC Mon. Pol. Panel Member Calls For Rate Hike: Press
iMarketNews.com
4. China Data Wrap: Economy Powers Along, Despite Global Woes
iMarketNews.com
5. China Aug M2 growth up 19.2 pct y/y, above forecast
Eileen Wang and Simon Rabinovitch, Reuters
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