China’s inflation below forecast and PPI better than expected, pushing down USDCNY
China released its May CPI, which contracted 0.2% on an MoM basis and increased 1.3% on a YoY basis. This means that China’s inflation is below forecast, strengthening its local currency. In the meantime, Producer Price Index (PPI) grew better than expected in May at 9% on a YoY basis, and factory gate prices also rose at their fastest pace since 2008. The accelerated growth was primarily attributable to the surging commodity prices. As governments across the globe are issuing stimulus to help business during a pandemic, the extra money has also brought global inflation, which has pushed up commodity prices. USDCNY is down about 0.08%, trading around 6.3951 at press time.
In the equity market, world stocks are hovering near record highs, while the US 10-year yield fell to 1.513%, near the monthly low. Investors are waiting for Thursday’s US inflation data, which will likely bring some volatility if unexpected results get published.