Today during the Asian session, we received data regarding the Chinese economy. This data did not impress investors and shows that the recovery is much weaker than expected. Inflation in China for June was as follows:
- CPI: 0.0% YoY (expected: 0.2% YoY; previous: 0.2% YoY)
- PPI: -5.4% YoY (expected: -5.0% YoY; previous: -4.6% YoY)
Start investing today or test a free demo
Create account Try a demo Download mobile app Download mobile appInflation in China is at its lowest since the COVID-19 pandemic, indicating that the economic reopening has not been as robust as initially anticipated. Source: Bloomberg, XTB
Additionally, data on property sales in the 30 largest cities in China was published. The data for June showed a decline of approximately 32% YoY, following only four previous months of growth driven by real estate market stimulation. Prior to the second quarter of 2021 until January 2023, there had been a continuous decline in property sales in this group of cities.
On the other hand, a simultaneous statement from the PBOC (People's Bank of China) and China's financial regulator indicates that the policy of supporting stable and healthy growth in the real estate market will be extended until the end of 2024.
Aussie and Iron Ore
The Australian economy is closely linked to China, primarily due to commodity trade. Australia's main export commodity is iron ore, which is quite responsive to economic data from China. Currently, we are witnessing significant declines in iron ore prices, which also impact the Australian dollar. AUD is the weakest currency today, losing 0.7% against the US dollar.
Source: Bloomberg
AUDUSD is clearly losing ground around the 0.6700 level, approaching a test of the lower boundary of the triangle formation. At the same time, AUDUSD is falling below the 50.0% retracement of the last major upward wave, remaining within a larger consolidation formation in the form of an expanding wedge. AUDUSD is exhibiting significant divergence with the inverted USDCNH. Source: xStation5.
The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.