China CPI below expectations & PPI above, mixed outcome, AUD steady

We have a mixed outcome from China's Consumer Price Index and Producer Price Index today as follows:

• China PPI (Y/Y) Aug 9.5% (est 9.0%; prev 9.0%).
• China CPI (Y/Y) Aug 0.8% (est 1.0%; prev 1.0%).

AUD/USD reaction

AUD tends to move on data related to China if the data is out of market expectations.

Today, AUD/USD is steady on the release near to the lows of the day at 0.7350.

AUD/USD bulls hang on nervously near 61.8% golden ratio, ECB looms

All eyes on ECB

Meanwhile, China’s inflation report could help drive trading direction in the lead up to the European Central Bank that decides on monetary policy later in the day with inflation at its highest in nearly a decade. 

See more on this event and the latest update on the price of EUR/USD here: 

• EUR/USD awaits crunch-time ECB interest rate (taper) decision

About China CPI

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.