AUD/USD keeps losses despite better-than-expected China PPI release

AUD/USD remains under pressure around 0.7870 despite growing evidence that China is reflating again.

PPI beats estimates

The producer price index (also known as factory-gate prices) jumped 6.9% year-on-year in September, beating the estimated figure of 6.6%. This is good news for the global economy as it is the pass through China’s rising costs via exports that lifts inflation expectations in the US and other parts of the world.

An uptick in Chinese PPI usually leads to risk-on action in the markets, hence, the dull action in the AUD/USD following the release of the Chinese PPI is somewhat surprising.

The spread or difference between the Aussie-US 10-year yield spread (48.5 basis points) has not moved as well.

AUD/USD Technical Levels

FXStreet Chief Analyst Valeria Bednarik writes, "the technical picture is bullish as the pair settled above the 38.2% retracement of its latest slump from 0.8098. In the daily chart, indicators maintain sharp bullish slopes, entering bullish territory straight from oversold readings while the price settled above an anyway bearish 20 DMA. In the 4 hours chart, the price accelerated sharply above a now bullish 20 SMA, while technical indicators regain their upward strength within overbought readings.  The next Fibonacci resistance comes around 0.7920, with gains above it opening doors for a steeper recovery."