China PPI cools further; AUD/USD registers marginal losses

The data released this Friday morning in Asia showed China PPI cooled to 5.5% y/y in May compared to the expected figure of 5.7%. 

The decline the PPI is bad news for the risk assets, given that it was the rebound in the factory-gate prices (Chinese PPI) in mid 2016 that set the reflation trade in motion. Thus, the moderation in the PPI could weigh over commodity prices and the Aussie dollar. 

However, the AUD/USD pair has registered only miniscule loss post China PPI release. The spot was last seen trading around 0.7540 levels. Moreover, gold remains well bid on account of the UK election uncertainty and that could be capping the losses in the Aussie dollar. 

AUD/USD Technical Levels

The immediate resistance at 0.7556 (100-DMA + May 2 high), if breached, would open up upside towards 0.7586 (Apr 24 high) and 0.76 (zero levels). On the other hand, a breakdown of support at 0.7531 (200-DMA) could yield a pullback to 0.75 (zero levels) and 0.7478 (10-DMA).