China's consumer prices increase

10 May, 2017

Consumer price index in China rose 1.2% on an annualized basis in the month of April, managing to beat estimates of 1.1% and higher than 0.9% from a month ago. The increase in inflation came on an increase in consumer income which helped to boost consumption. Disposable incomes were up 7%, compared to 6.3% previously. Non-food prices also increased, up 0.2% from March's 0.6% decline. Producer prices index was, however, disappointing as factory gate inflation rose just 6.4%, missing forecasts of a 6.8% increase and down from 7.6% last month. The Australian dollar was seeing a modest recovery after the AUD fell to a fresh 4-month low at 0.7328 on the back of the positive inflation figures from China. Earlier in the day, the Australian budget was released which also added to the declines. Ratings agencies said that the budget was consistent with the stable outlook of AAA for the nation.

EURUSD intraday analysis

EURUSD (1.0892): After posting two strong days of declines which sent the euro lower by nearly 100 pips, EURUSD is attempting to recover some of the losses with price currently testing the 1.0900 price level. Resistance could be forming at this level, but confirmation is required. Expect the bounce to push EURUSD around up to 1.0950, while to the downside watch for the main support at 1.0863 - 1.0854 region. A break down below this support is required for further downside towards 1.0750. ECB president, Mario Draghi is scheduled to speak today which could bring some event risk to the currency pair.

GBPUSD intraday analysis

GBPUSD (1.2948): The British pound closed in a doji yesterday as the currency pair stands firm at an 8-month high. The consolidation could keep prices choppy near 1.3000 handle but the bias remains to the downside unless we see a strong breakout above the 1.3000 handle. On the 4-hour chart, price broke out from the rising wedge pattern as mentioned in yesterday's commentary but prices quickly recovered towards the close. Resistance at 1.2965 - 1.2988 remains the key price level of interest. As long as GBPUSD remains pressured below this resistance, there is scope for the price to break the support at 1.2900 and extend the declines towards 1.2600.

XAUUSD intraday analysis

XAUUSD (1222.85): Gold prices continued their declines with the price falling to a new two-month low at $1214.24 yesterday. The descent is expected to see gold prices continue to push lower towards the $1200.00 handle in the near term. Any pullbacks ahead of the declines could see the possibility of a rally back to the $1250.00 handle, however. The daily Stochastics is very over-sold, highlighting this risk. On the 4-hour chart, the immediate resistance is now seen at 1225.00. A convincing breakout above this level will signal a short-term move towards 1225.00 - 1227.00.

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