Forex Market Updates & Commentary

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China Inflation comes in above expectations Posted: 11 Dec 2010 08:42 AM PST China’s inflation came in at 5.1% YoY. The expectation was 4.7%. Industrial Production was also stronger at 13.3% vs 13.1%. PPI YoY came in greater than expectations coming in at 6.1% vs 5.2%. Finally Retail Sales came in at 18.7% on a YoY basis which was the expectations. The data will pressure the Peoples Bank of China to increase rates to slow inflationionary pressures. On Friday, they raised the Reserve Requirement for banks to 18.5%. This limits the amount of liquidity the banks can lend out and thus is one way to contract monetary policy.

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