China posts fastest deflation since 2009 – AUD weaker

Data released overnight showed that China’s consumer price index fell by 0.8% in the year to January, the 4th monthly decline in a row and the largest deflation figure since September 2009. Add in the fact that China’s producer price index has fallen for 16 months and the scene is set for more concern in the Asian markets. Even though you may not have any dealings with China, the impact of this data is felt right across the Asian and Australasian regions, such as the influence of China’s economy in those parts. Hence the GBP/AUD rate is back up to AUD 1.9365. Although there are other factors at play here, the fact that China is Australia’s number one export market makes the Aussie Dollar a proxy for traders who are watching the Chinese economy. The impact is felt elsewhere as well, GBP/NZD has stabilised around NZD 2.0665 but the GBP/JPY rate has shot back up to JPY187.85. 

GBP USD rises ahead of US jobless numbers

The GBP/USD rate, affectionately known as ‘Cable’, is up a cent on the week so far. This afternoon’s release of the weekly data on fresh unemployment claims in the US is the next hurdle for this pair. Recent US jobs data has been quite unpredictable but the markets are expecting a slightly lower number for continuing jobless claims, at around 1.878 million and something in the order of 221,000 fresh jobless claims in the last week. Any variation from those numbers will clearly have a positive or negative effect on the value of the US dollar at a time when traders are trying to assess when the US Federal Reserve will change its policy of relatively high interest rates. As at this morning, the GBP/USD rate is up to $1.2625 and the EUR/USD rate is still looking a little depressed at $1.0780. In the day ahead speeches by central bankers from the UK, EU and US will be coming at us thick and fast, so be prepared to be caught off guard.