Major Currencies Unfazed As Chinese Inflation Unexpectedly Jumps

By Eric Andersen,

THETAKEAWAY : Chinese inflationunexpectedly accelerated in December > AUD, NZD dip slightly onlowered Chinese rate cut bets > Impact fades quickly as Eurozoneissues stay in focus

Chinese inflation accelerated last monthaccording to data released by the China Economic InformationNetwork. The Consumer Price Index rose at an annual rate of 4.5 percent inJanuary and the Producer Price Index rose 0.7 percent over the sameperiod. This is the first time that inflation levels have increasedsince June 2011.

While PPI was slightly lower than forecast, CPI rose much higher than the market expected. Price levels rose 4.1 percent in December and analysts were looking for a slowdown to 4.0 percent this month. Despite the large contrast to expectations, the data’s effect on price action was relatively muted. The Australian and New Zealand Dollars saw slight drops in the moments after the report was released as traders pared back hopes of further Chinese rate cuts, but both have since recovered.

Presumably, traders are reserving judgment for now pending the results of today’s meeting between EU finance ministers and Greek leaders in Brussels as officials continue to haggle over the debt-strapped country’s second bailout package. The latest discussions are reportedly marred by disagreement regarding cuts to Greek pension plans. The ECB monetary policy announcement due later today likewise marks an important inflection point for market-wide sentiment trends.
DailyFX is the forex news and research arm of FXCM, Inc (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.

Original Article: http://www.dailyfx.com/forex/market_alert/2012/02/09/Major_Currencies_Unfazed_as_Chinese_Inflation_Unexpectedly_Jumps.html

DailyFX is the forex news and research arm of FXCM (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.

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