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US Dollar Falls After a China CPI, Industrial Production Data
Written by article default Thursday, 11 November 2010 09:34
Risk appetite is getting a boost after a host of data on the Chinese economy was released during the Asia forex session. Interestingly, the data itself was not surprising relative to expectations. Rather, traders seem to be using the fact that the data did not surprise to the downside as an excuse to sell the dollar after four straight sessions of gains.The most anticipated piece of Chinese data was the Consumer Price Index (CPI) and Industrial Production figures. We saw that in the month of October, China CPI rose 4.4% year-over-year, above the 4% that was anticipated. Higher inflation in China is typically seen as a negative for risk appetite as it increases the chances that People’s Bank of China will raise interest rates, thereby slowing the country’s economy. In this instance, however, the market shrugged off the data. Industrial Production was a nonevent, rising 13.1% year-over-year, slightly below the 13.4% that was expected.
Separately, Moody’s upgraded China’s sovereign rating from A1 to Aa3 while maintaining a positive outlook.
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