- NZD/USD stays mildly bid even as China data shows persistent factory deflation.
- China’s economic rebound may not be as strong as expected, the weak PPI suggests
- Coronavirus vaccine hopes bode well for risk assets, including the NZD.
NZD/USD trades well above 0.68 at press time and looks to extend its six-day winning run despite the dismal China inflation.
The Producer Price Inflation or factory-gate prices fell by 2.1% year-on-year in October versus an expected drop of 2%, while the Consumer Price Index declined by 0.3% month-no-month, missing the expectation for a 0.2% rise and bringing the annualized growth to 0.5% from September’s 0.8%.
The persistent factory deflation highlights a weakness in industrial demand and suggests that China’s economic recovery may not be as strong as previously anticipated. The data is bearish for commodity dollars like the NZD. So far, however, the Kiwi bears have remained on the sidelines, allowing the pair to keep marginal gains above 0.6820.
The NZD’s resilience could be associated with New Zealand’s relative success in stamping out coronavirus and the pro-risk environment in the financial markets. The US drug giant Pfizer announced positive results of its coronavirus vaccine on Monday, triggering a rally in the US stocks and a sharp sell-off in gold, a haven asset.
The NZD/USD pair rose over 0.73% on Monday to register its sixth straight day of gains.