China Currency Surges After CPI Data Release

February 10, 2020 | Monday



After the release of the inflation data for January, the Chinese yuan boosted against the U.S. dollar. The USD/CNY pair declined by 0.2% to 6.9875. On Monday, data showed China's producer prices rose 0.1% year-on-year, which was the first pick up since May 2019. Then, previously, factory gate prices were expected to gain 0.1% from a year before, compared with a 0.5% fall in December. Also, consumer prices rose 5.4% year-on-year compared with an expected 4.9% gain and a 4.5 gain back in December. Meanwhile, the coronavirus situation is still in focus as workers in China went back to offices and factories around the country following the extended Lunar New Year holiday. Currently, the death toll from the disease has officially overtaken that of the SARS outbreak nearly two decades ago. At the same time, China revealed another 89 deaths last Sunday. As a result, it brought the total number of deaths in the mainland to 908. Also, the National Health Commission stated on its website that 2,656 new cases were confirmed as of end Saturday. And this makes the total number to 40,171 in mainland China.

The U.S. Dollar

Furthermore, the U.S. dollar index plummeted by 0.1% to 98.505 ahead of a vital testimony from Federal Reserve Chair Jerome Powell this week. Powell will give testimony before the House Financial Services Committee on Tuesday. A day after that, he will appear in front of the Senate Banking Committee. Aside from that, on the data front, the U.S. consumer price data this week is expected to be in focus. They expected the consumer prices to increase by 0.2% the previous month. Based on the estimates, this matches the gain seen for December. Then, on a yearly base, CPI is projected to increase by 2.5%, up from 2.3% a month before. For January, there are also U.S. retail sales figures. And this is where investors will be eyeing for further hints on the strength of the American consumer. In the consensus forecast, the report will display retail sales boosted 0.3% last month following a rise at the same pace in December. Elsewhere, GBP/USD pair edged up 0.1% to 1.2907. And U.S. Prime Minister Boris Johnson stated earlier this week that he was not pleased to accept the EU's request to sign up to its rules in any possible trade deal. Then, the USD/JPY pair inched up 0.1% to 109.78. And AUD/USD pair increased 0.5% to 0.6703.


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