Earlier in the Asian trading session, jittery investors had moved well away from commodity-linked currencies as investors awaited the release of several data pieces out of China which would hopefully provide additional clues as to the Chinese economic recovery. In the end, the data results were mixed, which likely didn’t substantially change investors’ outlook. There were slight improvements, including first quarter GDP growth, which came in as expected at 1.4% on a quarterly basis while annual figures just beat expectations at 7.4%; retail sales rose to 12.2%, beating analysts’ expectations. Disappointing investors was data on China’s industrial production which edged slightly higher to 8.8% in February but was still below expectations; urban investment also declined in February to 17.6% against expectations of an increase to 18.1%.
As reported at 10:56 a.m. (JST), the AUD/USD pair had earlier struck a 1-week low at $0.9337 but at 1:23 p.m. (JST) was trading at $0.9364. The New Zealand Dollar was an remains under pressure and is currently trading at a 1-week low against its U.S. rival at $0.8592, in part due to the Chinese data but as well on news of a drop in New Zealand’s annual inflation rate. The EUR/USD was trading at a session low of $1.3807 but has since drifted higher to $1.3818.
Deflationary Cycle Waning
Yesterday’s release of consumer price data in the U.S. helped to improve investors’ sentiment as the numbers showed a slight rise in annual inflation to 1.5%, which was generally taken as a sign that the long-held deflationary trend may finally be ending. Moreover, that could alleviate some concerns previously expressed by officials at the Federal Reserve.