News media across the globe today, washed with optimism that Chinese inflation number improves. Some points out producer price inflation had its best reading since last June. Even financial markets cheered the report.
Most of the Asian bourses are cheering the data, after Wall Street closed in deep green last night.
- India's benchmark stock index, nifty is up 0.7% so far, trading at 7160.
- Australia's ASX200 is up 2.25%, trading at 4992 mark.
- Japanese cash market is up 2.25%, while future is up by 0.7%.
Even Yuan has appreciated on the news. Yuan is currently trading at 6.517 in onshore market and 6.522 in offshore against Dollar.
However, we at FxWirePro, not so cheerful over today's data.
It is important to note, that Chinese inflation in January edged up by 1.8%, which is welcoming but far short of PBoC's target of 3%. Moreover, China is much younger and developing economy, so both growth and inflation must be higher than those observed in US, UK or Germany.
Next key point to note will be producer price index, which dropped and dropped by -5.3% from a year ago. Anyone who would like to point out that it is an improvement from prior -5.9%, we would like to counterpoint, change in base effect. Compared to December 2014, in January 2015, drop in producer price increased by full 1 percentage point.
So without being too optimist, we would be cautious and watchful over future dockets.
