(eToro Blog) China reported that inflation eased in the month of December. Consumer prices rose 4.1% in December on an annual basis. This was slightly lower than the 4.2% increase in November on an annual basis. While food prices have risen slightly, analysts expect the rise to be temporary. Producer prices rose 1.7% on an annualized basis. Economists expect the Chinese central bank to move their focus away from fighting inflation and loosen monetary policy to stimulate growth. The People’s Bank of China has already lowered reserve ratio requirements of banks to encourage more lending. The real estate market in China has seen a bubble burst with mortgage owners under water in their loans.
New Zealand reported that commodity export prices dropped 0.8% in December from the previous month. In comparison prices are 3.1% compared to December 2010. The index dropped for the past seven consecutive months. As Europe threatens the global economy, consumers of commodities such as China and India are cooling demand and hence bringing down prices of these commodities.
Japan reported that its current account surplus dropped 86% in November. The large drop was attributed to drop in exports and increase in imports. Exports dropped due to the global economic slowdown. Imports increased as Japan imported natural gas for energy uses in the aftermath of the nuclear disaster in March of 2011. The results came worse than analyst expectations. The surplus was around 138.5 billion yen in November.
Asian markets are slightly down ahead of the central bank decisions in Europe and United Kingdom. The Japanese Nikkei is down 0.73%, the Hang Seng is down 0.05%, the Shanghai index is down 0.02% and the Australian S&P ASX is down 0.11%. Traders on OpenBook are primarily long on the USDJPY with average limits at 77.60 and stops at 76.60.
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