Australian Dollar Falls Following China CPI Inflation Data

The Australian dollar weakened against other major currencies in the Asian session on Thursday, following the release of consumer prices in China in December.

Data from the National Bureau of Statistics showed that the consumer prices in China were flat on month in December. That exceeded expectations for a decline of 0.2 percent following the 0.6 percent drop in November.

On a yearly basis, consumer prices were up 0.1 percent - matching forecasts and easing from 0.2 percent in the previous month.

The NBS also said that producer prices dropped an annual 2.3 percent - exceeding forecasts for a decline of 2.4 percent following the 2.5 percent contraction a month earlier.

In economic news, data from the Australian Bureau of Statistics showed that the value of retail sales in Australia was up a seasonally adjusted 0.8 percent on month in November, coming in at A$37.052 billion. That was shy of expectations for an increase of 1.0 percent but was up from 0.6 percent in October.

Meanwhile, Australia posted a seasonally adjusted merchandise trade surplus of A$7.079 billion November, the Australian Bureau of Statistics said on Thursday. That beat expectations for a surplus of A$5.750 billion following the upwardly revised A$5.670 billion surplus in October.

Exports were up 4.8 percent on month to A$43.816 billion, up from the downwardly revised 3.5 percent increase in the previous month. Imports were up 1.7 percent on month at A$36.737 billion following the downwardly revised 0.1 percent contraction a month earlier.

Asian shares traded lower amid uncertainty about the outlook for interest rates following mixed U.S. jobs data. The minutes of the U.S. Fed's latest monetary policy meeting also did not provide much insight into interest rates other than to suggest officials plan to take a "careful approach" to future decisions.

A report showed U.S. private sector job growth slowed more than expected in December, while another report showed weekly U.S. jobless claims unexpectedly fell to their lowest level in almost 11 months.

Crude oil prices settled lower, as a sharp increase in gasoline stockpiles and a stronger dollar weighed on oil prices. West Texas Intermediate Crude oil futures for February ended lower by $0.93 or 1.25 percent at $73.32 a barrel.

A cautious undertone prevailed as government bond yields surged on concerns about potential tariffs under Trump's presidency and prospects of fewer interest-rate cuts by the Federal Reserve this year.

In the Asian trading today, the Australian dollar fell to a 9-day low of 0.6182 against the U.S. dollar and a 3-day low of 97.72 against the yen, from yesterday's closing quotes of 0.6215 and 98.41, respectively. If the aussie extends its downtrend, it is likely to find support around 0.59 against the greenback and 95.00 against the yen.

Against the Canadian dollar and the euro, the aussie slipped to 1-week lows of 0.8897 and 1.6665 from Wednesday's closing quotes of 0.8932 and 1.6599, respectively. The aussie may test support support near 0.86 against the loonie and 1.69 against the euro.

The aussie edged down to 1.1069 against the NZ dollar, from yesterday's closing value of 1.1080. On the downside, 1.09 is seen as the next support level for the aussie.

Looking ahead, Eurozone retail sales figures for November is due to be released in the European session at 5:00 am ET. Sales are expected to grow 0.3 percent on month after falling 0.5 percent in October.

In the New York session, U.S. weekly jobless claims and U.S. wholesale inventories data for November are slated for release.

U.S. stock markets are closed in observance of the U.S. National Day holiday.

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