Breaking: Chinese inflation miss pressures AUD/USD, bulls now rely on risk appetite returning

The Consumer Price Index is released by the National Bureau of Statistics of China has arrived lower than expected and is pressures AUD a touch, off by some 5 pips so far:

China CPI

China PPI (YoY) Jan: 9.1% (est 9.5%, prev 10.3%) .

China PPI

China CPI (YoY) Jan: 0.9% (est 1.0%, prev 1.5%)

AUD/USD update

The AUD/USD bulls have not got what they were looking for in this data, but Wall Street ended sharply higher on Tuesday, as signs of de-escalating tensions along the Russia-Ukraine border sparked a risk-on session. This in turn spread to the high beta currencies such as the Australian dollar.

• AUD/USD Price Analysis: Chinese CPI anticipated, but may not be what the bulls are hoping for

Moreover, inflation concerns are a global paradox that is likely to underpin the commodity sector for which AUD trades as a proxy and can benefit. The Reserve bank of Australia is also tipped toeing around the edge of hawkishness and tightening expectations remain elevated.  All of which supports a meanwhile bullish outlook for AUD crosses. 

AUD/USD 4-hour chart

About the Consumer Price Index 

The Consumer Price Index is released by the National Bureau of Statistics of China. It is a measure of retail price variations within a representative basket of goods and services. The result is a comprehensive summary of the results extracted from the urban consumer price index and rural consumer price index. The purchase power of the CNY is dragged down by inflation. The CPI is a key indicator to measure inflation and changes in purchasing trends. A substantial consumer price index increase would indicate that inflation has become a destabilizing factor in the economy, potentially prompting The People’s Bank of China to tighten monetary policy and fiscal policy risk. Generally speaking, a high reading is seen as positive (or bullish) for the CNY, while a low reading is seen as negative (or Bearish) for the CNY.