AUD/USD's recovery from session low stalls

after weak China PPI

NEWS | 4 minutes ago | By Omkar Godbole

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 AUD/USD struggles to print gains as China reports a bigger-than-

expected drop in PPI. 
 Consumer inflation also rose at a slower pace in May. 
 Dismal Aussie Home Loans data could be adding to bearish pressures
around the AUD.

AUD/USD's recovery from the session low of 0.6933 looks to have stalled near
0.6960 following the release of the weaker-than-expected China producer price
index (PPI). 

According to the National Bureau of Statistics, the PPI, which measures costs for
goods at the factory gate, fell 3.7% year-on-year in May versus expectations for a
3.3% decline, having dropped by 3.1% in April. 

The deflation in factory-gate prices could be associated with the slowdown caused
by the coronavirus outbreak and the resulting slump in global commodity prices. A
weaker PPI, therefore, is bad news for the commodity-sensitive currency like the
Australian dollar. 

The PPI data came along with the release of the consumer price index, which
showed consumer inflation rose 2.4% year-on-year in May, missing the forecast for a
2.7% rise following April's 3.3% gain. 
Apart from the weak PPI, the dismal domestic data seems to have put brakes on
AUD's recovery. The number of Home Loans fell by 4.4% in April, extending the
0.9% drop seen in March, the data released by the Australian Bureau of Statistics
showed. The number indicates a declining level of consumer confidence in the
housing sector and is a bearish development for the Aussiedollar. 
Even so, the AUD could rise during the day ahead if the risk assets put on a good
show, erasing Tuesday's decline. At press time, the futures tied to the S&P 500 are
reporting a 0.5% rise. 
 Technical levels
1.
1. R30.7182
2. R20.7113
3. R10.7037
2. PP0.6967
3.
1. S10.6891
2. S20.6822
3. S30.6746
Updated Jun 9, 00:00 GMT