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)
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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.
