China's CPI Falls

Daily Forex Fundamentals | Written by AC-Markets | Mar 10 09 08:53 GMT |

Market Brief The Usd was weaker in the Asian session, as fx traders lack the conviction to push markets in one direction. The EurUsd was range bound trading between 1.2580 to 1.2720, while the UsdJpy settled between 99.14 and 98.35. The Sterling was able to stabilize after yesterday's mass exodus, with the GbpUsd trading around 1.3850 and 1.3777 (with UK yields dropping significantly over the past few sessions and concerns over the UK banking sector we expect the Sterling to come under renewed pressure). The equity market sell-off continued, with the S&P500 finishing down 1.0% yesterday and Asian regional indexes are mixed with the Nikkei down by 0.4% and Hang Seng up 2.97% (partially due to the government probe in HSBC trading, which fell 24% yesterday). Crude prices continue to rise as markets have increased bets on an OPEC production cut. In the current climate, we continue to expect the greenback to stay supported, as US investors repatriate funds and risk-averse foreign investors continue to acquire safer, liquid US Treasury. In Australia, business conditions in February fell 9 points, to -20 index points. This marks the weakest outcome since the early 90s. However, business confidence rose by 10 pts, to -22 index points (although still a vey weak level). The rise was concentrated in the retail, wholesale and transport sectors which all benefited from the government stimulus package. In China, the CPI dropped 1.6% y/y, the first negative growth since December 2002, according to National Bureau of Statistics figures. The declining growth should keep inflation below China's 4% target, but should increase rapidly as China's economy gradually picks up the pace. Meanwhile, in Japan leading indicators for January fell slightly to 77.1 vs. 77.4 exp and 79.4 revised prior reading. In the UK, the industrial production data will be the highlight of the European session. The release is expected to confirm that manufacturing recession is to be as severe as in the early 1980's. Given the pressure on the Sterling in recent day, we expect this negative number will have an equally negative effect on the currency. ACM FOREX Disclaimer: This report has been prepared by AC Markets (thereof ACM) and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Salesperson or Traders of ACM at any given time. ACM is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.