$ AUD, NZD Weakens as Higher Chinese Inflation Suggests Tightening.

The Takeaway: rising Chinese inflation could mean tightening > reduced demand for raw materials Australia New Zealand > AUD, NZD falls

Australian and New Zealand dollars weakening after the March consumer price index China showed higher than expected. With a more rapid price increase, people's Bank of China and the Government can tighten, if deflationary PPI and CPI target can avert large scale actions. Current inflation target China for 2012 is set to 4.0%.

GMT	China Price Indices	ACT	EXP	PREV
1:30	CPI (MAR)	3.6%	3.4%	3.2%
1:30	PPI (MAR)	-0.3%	-0.3%	0.0%

Despite the lower point in the so-called Aussie and Kiwi against the US dollar, reaction of the market to the Chinese data is relatively discrete. The two currencies have been selling as markets react to the situation Friday as the planned national focal points. Even with the higher consumer price, the people's Bank of China could adjust its update to cool the domestic economy. With the divergence between the PPI and CPI, the Bank could see that inflation, pressures are caused by domestic products, including agriculture. This could lead to adjustments in the economic policies of China more focused on the economy rather than hurt the export sector. 

Figure 5 minute AUDUSD. Line indicates the time of broadcast data. Graph generated with FXCM strategy Trader.

Figure 5 minute NZDUSD. Line indicates the time of broadcast data. Graph generated with FXCM strategy Trader.