Ella 
The Asian market opened on Monday, with AUD/USD strengthening. Weaker-than-expected US producer price index (PPI) data on Friday sent the dollar lower and boosted AUD/USD. Since Monday is Martin Luther King Jr. Day and the United States is about to have a long weekend, the market may be relatively calm in terms of U.S. economic data. AUD/USD is currently trading around 0.6687, up 0.06% on the day.
The U.S. Bureau of Labor Statistics released on Friday that the overall producer price index was at an annual rate of 1.0% in December, compared with the previous value of 0.8%; the core producer price index was at an annual rate of 1.8%, compared with the previous value of 2.0%. Both readings were below consensus. On a monthly basis, the headline and core PPI were flat at -0.1% and 0% respectively. The dollar and U.S. Treasury yields were lower after the data was released.
Markets are pricing in an 86% chance of a rate cut by March, with the overall easing cycle in 2024 priced at about 166 basis points, compared with a Fed dot plot forecast of 75 basis points.
On the other hand, China’s consumer price index (CPI) fell to 0.3% from -0.5% in November, lower than the -0.4% expected. Separately, China’s exports beat expectations in December, but the world’s second-largest economy’s trade balance fell in 2023. However, the impact of these data will be limited as market participants focus on signals of cooling in U.S. inflation.
