On Wednesday (09/November), China's National Bureau of Statistics published their data on Producer Inflation (PPI) for October 2022. That data fell from 0.9 percent to -1.3 percent on an annual basis.
That was for(Year-over-Year period. Although slightly better than the forecast of -1.5 percent, the PPI data this time is quite bad because it plunged into the negative zone for the first time.
It is especially since the end of 2022. Capital Economics analysts predict that China's PPI trend in general will remain this way until 2023 where it is based on several reasons.
This was caused by an annual data adjustment after soaring to 13.5% in October 2021. Meanwhile, consumer inflation (CPI), which was also released this morning, showed an increase.
CPI is 2.1% Higher
However that raise of CPI was just 2.1 percent which is lower than expectations of a 2.4 percent increase. That was also slowing down from 2.8 percent growth in the previous period.
The Core consumer inflation (Core CPI) excluding food and energy prices rose by 0.6%. That number was still the same and unchanged from a month befote.
China's October CPI data eased after hitting a 20-month high of 2.8% in September. The current CPI figurein that country is still below the government's target of 3.0 percent for this year.
People expect that the outlook to remain in a low range in the coming quarters. This was said by Zichun Huang and Julian Evans-Pritchard, the Capital Economics analysts.
Food Prices are also Slumped
The weakening of CPI data is actually inseparable from the decline of several components. In this case, the increase in food prices slumped from 8.8% to 7.0% based on a data release.
That was as did the increase in the price of non-food goods which slowed from 1.5% to 1.1 percent. The slump in consumer prices in October was largely triggered by declining demand.
It was especially after the holiday season in September. That analyst was said by Dong Lijuan, a senior statistician at China's National Bureau of Statistics.
Elsewhere, the US dollar index or it is also known as DXY sank in the 109.50s range in early Asian session trading Wednesday (9/November). That was happened after it was slumping dramatically over the previous three trading days.
Greenback is Pressed by Various Factors
Various factors are pressing on the greenback at the moment. Starting from the recalculation of the Fed's interest rate outlook after the US unemployment rate hike, to market concerns.
It is more about the results of the midterm elections and the release of United States inflation data in the near future. The America held by-elections starting on November 8.
This by-election will determine whether it is the Republican or Democratic party that will control the Congress in that country. A total of 435 House of Representatives seats and 35 Senate seats were contested.
The results of previous surveys as well as the results of this interim calculation suggest that Republicans have the potential to win. It is for both; the Senate and the House of Representatives.
The Calculation of Fiscal Stimulus
In fact, the victory of the Republican camp will further complicate the launch of US President Joe Biden's policy programs. Reflecting on the turmoil of his previous United States budget plan, Biden needs the support of the Democratic party to launch abundant fiscal stimulus.
If Republicans win, the scale of fiscal stimulus is likely to be much smaller. On the other hand, minimal fiscal stimulus will allow the Fed to slow the pace of its rate hikes more quickly.
Thus, the Republican dominance over the Congress could have a negative impact on the US dollar. However, that will be positive for the Wall Street stock exchange.
On the contrary, the victory of the Democratic camp can be a positive catalyst for the USD. Unfortunately, observers judged the prospect of a Democratic victory to be very small.
