China's CPI and PPI fell into negative territory YoY for the first time since the 2020.

China's Consumer Price Index (CPI) for July experienced a year-on-year decrease of -0.3%. However, there was a slight increase of +0.2% compared to June, Interestingly, this year-on-year figure for July surpassed the anticipated 0.4% drop, marking the first decline of its kind since early 2021.

Meanwhile, Producer Price Index (PPI) for July declined by -4.4% year-on-year. This showed an improvement from the -5.4% drop witnessed in Junebut was worse lower than the -4.1% forecast.

A significant factor influencing the CPI was the -26% year-on-year drop in pork prices. On the other hand, tourism prices saw a rise, increasing of +13.1% from the previous year. Additionally, the core CPI, which excludes food and energy costs, experienced a year-on-year rise of
+0.8%. This was its highest point since January.

Slow domestic demand continues to weigh on the economy and inflation. Yesterday, trade data from China indicated a significant reduction in both overseas and domestic demand. Specifically, exports which fell by 14.5% year-on-year, while imports dropped by 12.4%.

The forecasted midpoint for the USDCNY was expected at 7.2198 per dollar. So when it was set by the PBOC at 7.1588/dollar it was a bit surprising. Later in the session, there was a report that China's major state-owned banks were seen selling dollars to buy yuan.

The USD selling vs the yuan also found its way into selling the dollar vs other currency pairs.

Toward the end of the session, the greenback reached new lows vs the EUR, GBP, CHF, AUD and NZD.

Looking at the EURUSD, it rose to test its 100-hour moving average at 1.0969 but did find willing sellers on the first test.. The pair is trading at 1.0963 currently.

The GBPUSD which tested its lower 100-hour MA early in the Asian session at 1.2732, got within 9 pips of the 200-hour MA at 1.2768. The high price reached 1.2759 before backing off to 1.2750. Heading toward the European session, traders will be eyeing that MA on more upside buying. The price has not traded above its 200-hour MA since July 27.

The AUDUSD made it's way above its 100-hour MA at 0.6553, but has dipped to 0.6550 currently. That MA will be a bullish/bearish barometer as the day progresses.

The problem for the rest of the day, is the markets lack in fundamental news until the US CPI is next released on Thursday at 8:30 AM ET. That may keep the markets subdued.

In other markets:

  • e-mini S&P is trading up 0.07%
  • Japan's Nikkei is trading down -0.41%
  • China's Shanghai Composite index is down -0.36%
  • Hong Kong's Hang Seng index is down -0.06%
  • Australia's S&P/ASX index is up 0.12%
  • Gold is up $5.25 or 0.27% at $1930.70
  • Silver is up $0.13 or 0.58% at $22.88