Chinese Inflation Accelerates

www.investing.com/analysis/chinese-inflation-accelerates-200634287

By FxPro Financial Services Ltd (Alexander Kuptsikevich) | Jan 12, 2023 06:00AM ET

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China picked up the torch this morning with the publication of national inflation data. In December, the consumer price index rose from 1.6% to 1.8% y/y. Producer prices, an important leading indicator for national and global inflation, are losing 0.7% y/y, the third consecutive month of y/y decline. While consumer prices matched expectations, producer prices came in well below analysts' average forecast of -0.1%.

Chinese inflation turns up

In contrast to much of the world, China faces low rather than high inflationary pressures - the tail-end effect of austerity policies due to quarantines that have stifled economic activity. Some are suggesting a contraction of the economy in the first quarter, and the trend of a sharp slowdown coupled with widespread unrest was a fundamental reason for the December withdrawal of the 0-covid policy.

Overall, the opening of the economy promises to be a crucial pro-inflationary factor capable of pushing up global commodity prices. But China also buys more from Russia and Iran at a discount and is almost a monopoly buyer. At the same time, China is re-establishing coal purchases from Australia, which can also keep domestic prices down.

USD/CNH price chart.

In the same direction, the appreciating renminbi has risen by 2.3% against the US dollar since the start of the year and by 8% from its peak in November to 6.75 USD/CNH, where the pair had consolidated before from May to August.

On the weekly charts, the USD/CNH struggles for long-term trends as the pair trades between the 50- and 200-week averages. Overcoming these levels in the last three years has triggered powerful moves. And now, similarly, it could be the starting point for a strong movement.

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Central Banks

Interest Rates

Next Meeting

FED

5.00%

May 03, 2023

ECB

3.50%

May 04, 2023

BOE

4.25%

May 11, 2023

SNB

1.50%

Jun 22, 2023

RBA

3.60%

Apr 04, 2023

BOC

4.50%

Apr 12, 2023

RBNZ

4.75%

May 24, 2023

BOJ

-0.10%

Apr 28, 2023

CBR

7.50%

Apr 28, 2023

RBI

6.50%

Apr 03, 2023

PBOC

3.65%

BCB

13.75%

May 03, 2023

US 30	32,304.7	-127.4	-0.39%
US 500	3,955.0	-22.5	-0.57%
Dow Jones	32,303.84	-128.24	-0.40%
S&P 500	3,955.20	-22.33	-0.56%
Nasdaq	11,652.29	-116.55	-0.99%
S&P 500 VIX	21.08	+0.48	+2.33%
Dollar Index	102.110	-0.408	-0.40%

Crude Oil WTI	73.07	+0.26	+0.36%
Brent Oil	77.95	+0.19	+0.24%
Natural Gas	2.173	-0.042	-1.90%
Gold	1,992.55	+21.05	+1.07%
Silver	23.413	+0.268	+1.16%
Copper	4.0637	-0.0148	-0.36%
US Soybeans	1,467.00	+25.00	+1.73%

U.S. 10Y	3.541	+0.013	+0.37%
U.S. 30Y	3.761	+0.001	+0.03%
U.S. 5Y	3.6359	+0.0410	+1.14%
U.S. 3M	4.7609	+0.0090	+0.19%
US 10Y T-Note	114.83	-0.16	-0.14%
Euro Bund	136.15	-0.10	-0.07%
10-2 Yield Spread	-47.23	-7.43	18.67%

Apple	156.27	-2.01	-1.27%
Alphabet A	100.40	-2.06	-2.01%
Tesla	187.61	-4.20	-2.19%
Amazon.com	96.73	-1.31	-1.34%
Netflix	322.07	-5.59	-1.70%
Meta Platforms	198.74	-4.10	-2.02%
Bank of America	28.11	-0.38	-1.32%

Chinese Inflation Accelerates

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