• Chinese inflation metrics come in slightly below expectations
  • API reports a massive draw in oil stocks
  • Another slight jawboning targeted at AUD from the RBA

While most of attention was turned to mounting tensions between the US and North Korea overnight, we got notable macroeconomic data from the Chinese economy pertaining to price dynamics.

CPI came in at 1.4% yoy in July slightly missing a forecast placed at 1.5% yoy, whereas PPI showed a 5.5% increase in a yearly basis against a consensus at 5.6% yoy. Even as both metrics marginally missed projections, it could not be treated as a warning signal. The data coming from the China’s economy over the course of recent months have been really favorable, hence there’s little to be afraid assuming the data is not falsified.

link do file download linkWhile PPI has surged of late, CPI has remained broadly unchanged suggesting neither inflationary nor disinflationary pressures. Source: Bloomberg

Let’s move on to the commodity market as we are ahead of the DoE’s report on a change of oil inventories which is expected to come in later in the day. As usual, the American Petroleum Institute (API) released its own report yesterday which showed a major draw of 7.839 million barrels in United States crude oil inventories, compared to analyst expectations of a modest draw of 2.272 million barrels for the week ending August 4.

Gasoline inventories rose by 1.529 million barrels for the week ending August 4, compared to analyst expectations that inventories for the fuel would fall by 1.5 million barrels. Crude prices were little changed following the data after falling during the day despite Saudi Arabia’s promise to curb in September crude oil exports to its prime market—Asia.

link do file download linkWTI oil prices are in a retreat, volatility is contained though. Having said that, oil prices could set the stage for a breakout to the upside from a triangle formation as there is a rise in volume as the price consolidates. Volume during the DoE’s report could be elevated as well. Source: xStation5

The Reserve Bank of Australia’s Kent expressed his remarks overnight indicating that recent AUD appreciation is more a story about USD’s depreciation. He added that a further rise in the AUD would result in slightly lower domestic growth. RBA’s member noticed that global markets may have under-priced a potential for higher inflation.

Furthermore, we got the consumer confidence gauge from Westpac for the Australian economy which slipped in August from 96.6 to 95.5. Besides, home loans increased just 0.5% mom while a 1.5% mom rise was expected. It could suggest that the macro-prudential measures could have already begun kicking in. Even though the data was rather positive for the currency, the AUD is the poorest in G10 which could stem from a risk-off mode seen in the morning.

link do file download linkThe AUDUSD has broken an upward trend line which could foretell an extended decline towards the nearest support area placed at 0.7755. Source: xStation5