China’s inflation slowed in January to 0.8%, which was below the 1% economists expected and well below last January’s 1.5% figure. The Aussie Dollar initially started to fall on the news until traders figured out that such a sharp year on year fall in inflation will likely see the People’s Bank of China inject fresh stimulus and also lower the amount of cash banks in China need to keep on deposit. This sent the Aussie Dollar higher on PBOC stimulus hopes.
So if you are wondering why the Aussie Dollar rose after a very poor inflation figure out of China it is because whenever China’s economy has weakened the Chinese Government has stepped in and added stimulus which gives hope to mining companies. China might buy more of our Ore and Coal, which in turn helps the Aussie economy.
No comments:
Post a Comment