Chinese CPI results came in line with market consensus at 5.5%

<p>Avoidance of more extreme outcome buoys regional equities and aids risk currencies. AUD/USD Range: 1.0569 – 1.0647 Support: 1.0550 Resistance: 1.0680 AUD/USD was on a […]</p>

Avoidance of more extreme outcome buoys regional equities and aids risk currencies.

Range: 1.0569 – 1.0647
Support: 1.0550
Resistance: 1.0680
AUD/USD was on a bid tone following the late fast-money driven rally in New York. Earlier jitters over the impending Chinese CPI data sent the pair lower. The data was poor but less dire than expected, with Aussie leaping back through the New York high. Treasurer Swan warned that parts of the economy were suffering from a strong Aussie.
Range: 1.4378 – 1.4445
Support: 1.4350
Resistance: 1.4450
EUR/USD closed in New York at $1.4413, off late recovery highs of $1.4430. The market reacted to Fed member Fisher’s comments that the Fed must reverse its super easy monetary policy or risk fuelling inflation. BoJ comments on the Japanese economy gave a boost to the euro, as well as plans to expand the growth sector lending facility. Chinese inflation data coming in at forecast levels (5.5% as compared to pre-release rumours of 5.8% to 6.0%), boosted risk and took the rate through earlier highs. S&P downgraded the Greek government’s debt three notches to CCC, saying that any sort of restructuring would likely “result in one or more defaults under the criteria. The move followed Moody’s and investors are unlikely to be surprised by further downgrades ahead.
Range: 1.6356 – 1.6426
Support: 1.6440
Resistance 1.6400


GBP/USD closed in New York at $1.6380, just off extended recovery highs of $1.6390, following a mix of profit-taking and a paring back of risk positions ahead of the release of Chinese economic data. There were concerns that inflation would come in above the forecast level of 5.5%, but these fears were allayed as economic data confirmed the outlook which prompted a move back into risk.  Martin Weale showed he has no intention of changing his hawkish stance. In a speech he said that ‘the reality is that any policy of holding the interest rate constant is likely to be unstable. The MPC must be prepared eventually to address above-target inflation by higher nominal and real interest rates. [this is] why the bank rate should increase now.”

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