- Chinese CPI climbed from 0.8% to 1.4%, higher than projected 1.0% figure
- China’s producer prices fell by 4.8% year-over-year in Feb, worse than expected 4.3% drop
- Australia’s NAB business confidence fell from 3 to 0 in Feb
- Fonterra group halts trading after receiving contamination threats
- Swiss jobless rate, French and Italian industrial production due
And dollar bulls are at it again! Risk aversion was the name of the game in the past few hours, as the safe-haven Greenback advanced against its higher-yielding forex counterparts. Data released in today’s Asian trading session hinted of further weakness in other top economies, in contrast to strong U.S. reports lately.
In China, the annual CPI improved from 0.8% to 1.4% in February, higher than the projected 1.0% reading. However, producer prices marked a sharper than expected 4.8% year-over-year decline instead of the estimated 4.3% drop, hinting that consumer prices could see more downside pressure later on.
What made things worse for the Aussie was the drop in Australia’s NAB business confidence index from 3 to 0 in February, reflecting weaker confidence in the sector. AUD/USD is down more than 50 pips (-0.66%), AUD/JPY is lower by 18 pips (-0.18%), and AUD/CAD is looking at a 40-pip loss (-0.41%).
The Kiwi is also weaker, with NZD/USD breaking below the .7300 handle (-0.62%). News that Fonterra halted trading after getting contamination threats on its infant milk formula weighed heavily on the New Zealand dollar, as this could drive dairy prices lower once more.
The forex calendar shows that we have a data-light London trading session up ahead, which means that risk sentiment could continue to drive price action. Only the Swiss jobless rate and industrial production reports from France and Italy are lined up in the next few hours.
Unemployment in Switzerland could climb from 3.1% to 3.2%, which might lead to more franc declines. French industrial production could fall by 0.2% while Italian industrial production could show a feeble 0.2% uptick, lower than the previous 0.4% increase. Watch out for weaker than expected figures which might lead to a steeper drop for the euro!
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