The Chinese have reported a healthy trade surplus with a net increase in the import of soft commodities. This drove AUD/USD off the 0.9000 handle towards the next resistance level of 0.9060.
Are the Aussies looking for another boom? I would expect they would quite enjoy that after a tough second half of 2013 and poor start to 2014, but it is early days.
China yuan didn’t change much as the supply and demand for the currency is pretty well balanced. Despite how steady things are, there are clear signs that China’s economy and foreign investment are starting to slow.
However there is speculation that second biggest economy has exaggerated its figures again by fake exports invoices to disguise poor capital inflows.
With the Chinese CPI and PPI figures due early on Friday morning these will be closely watched.
Inflation is expected to dip lower to 2.3% from the previous month which was 2.5%. This is likely to due to the Lunar New Year and the expectations of sufficient food supplies.
However a warmer than expected winter has depressed agricultural prices which would have lead decreasing pressure on food prices. In the long term, inflation is expected to grow to 3% for 2014, slightly higher that of 2013 rate of 2.6%, but failing to match earlier estimations of 3.5%.
Inflation will be closely watched over the next six months as reasonable levels could lead to changes in price mechanisms on public utilities. However, easing inflation could lead to modifications in monetary policy.
Finally, producer prices index has been below zero for 23 month, with expectations for the index expected to drop to -1.7% for January, which is a slight improvement since the lows of -3.5% back in October 2012.