UK CPI increased less than expected

The Consumer Prices Index (CPI) rose by 0.6% in the year to August 2016, unchanged from July. The rate is still relatively low in the historic context although it is above the rates experienced in 2015 and early 2016. The main upward contributors to change in the rate were rising food prices and air fares, and a smaller fall in the price of motor fuels than a year ago. These upward pressures were offset by falls in hotel accommodation prices, in addition to smaller rises in the prices of alcohol, and clothing and footwear than a year ago.

The price of goods bought and sold by UK manufacturers, as estimated by the Producer Price Index, rose in the year to August 2016. This is the second increase in a row following 2 years of falls. Factory gate prices (output prices) for goods produced by UK manufacturers rose 0.8% in the year to August 2016, compared with a rise of 0.3% in the year to July 2016. The index has been following an upward trend since August 2015. The increase of 0.8% in the year to August 2016 is a continuation of the trend over the past year.

Sterling is currently being traded around 1.3280 level. Pair is likely to find support around 1.3240 area and resistance above 1.3340 handle.

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China's CPI weakened for the fourth consecutive month

Chinese consumer inflation weakened for the fourth consecutive month, while a smaller decline in producer prices raised expectations that overcapacity in the manufacturing sector was beginning to fade. The consumer price index (CPI) advanced 1.3% from a year ago, following a 1.8% increase in July, the National Bureau of Statistics reported Friday. A median estimate of economists forecast CPI inflation to weaken to 1.7% annually.

China's CPI increased by 1.8%

Also, from China CPI and PPI data was published. Chinese inflation weakened further in July, adding to the central bank’s recent calls for more “innovative” monetary policies that stress liquidity as opposed to further rate cuts. China’s consumer price index (CPI) came in at an annualized 1.8% in July after slowing to 1.9% in June, the National Bureau of Statistics said in a report on Tuesday. The reading was in line with the median estimate of economists. Compared to June, consumer inflation rose 0.2%. The People’s Bank of China (PBOC) targets annual inflation at around 3%.

Rising food costs supported inflation through the first half of the year, with CPI reaching a nearly two-year high of 2.3% in February. That level would be maintained for an additional two months before weakening again in May. Factory-gate prices declined for a 53rd consecutive month in annualized terms, government data showed on Tuesday. The producer price index (PPI) fell 1.7% in the 12 months through July. The rate of contraction in producer prices has eased in each of the past seven months, a sign that the worst of the manufacturing downturn had passed.

Aussie is currently being traded around 0.7640 level. Pair is likely to find support around 0.76 handle and resistance above 0.7680 area.

Australian PPI rose by 0.1%

Australian PPI rose 0.1% in the June quarter 2016. This was mainly due to rises in the prices received for petroleum refining and petroleum fuel manufacturing (+13.6%), meat and meat product manufacturing (+3.7%) and building construction (+0.4%).