Chinese CPI signals imminent easing measures

The dollar trades with a slightly offered bias in Asia as both the AUD and NZD enjoy positive sessions. The catalyst behind the antipodean move higher is a Chinese CPI inflation number that fell to a fresh 5-year low, which has increased the hopes for further easing from the PBOC.

The global deflation concerns are gaining momentum across Asia following the latest below consensus reading for China, at just 0.8% versus the expectations of 1%. PPI dropped to -4.3% versus a consensus forecast of -3.8%. The weaker inflations readings can be attributed to the timing of the Chinese New Year, although the falling oil price is no doubt the largest contributor to the benign data as declines in metals prices have also weighed on the PPI reading. The cut in the reserve ratio requirement earlier this month is now likely to be followed by a further easing response.

The FX markets are likely to be dominated by developments in the Greek political saga ahead of the Eurogroup meeting on Wednesday. We hear from Federal Reserve member Charles Lacker, who is deemed a hawkish member of the voting committee.

EUR/USD
Supports 1.1260-1.1105-1.1000 | Resistance 1.1405-1.1530-1.1680

USD/JPY
Supports 118.30-117.25-116.80 | Resistance 119.35-120.85-122.00

GBP/USD
Supports 1.5220-1.5180-1.5105 | Resistance 1.5330-1.5388-1.5450

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