Despite some initial volatility, now the dust has settled the Aussie Dollar appears largely unmoved by both the CPI and China'a Flash PMI which were neutral to bearish compared to expectations. This may reflect the extended nature of the current downtrend with most longer oscillators deep in oversold territory already. The PMI figure came in at 47.7 compared to expectations of 48.2. Its components were pretty much universally weaker including faster decreases in new orders; new export orders and output. While this adds more pressure to China's employment market, the currency markets may be taking some heart from yesterday's statement by Premier Li Kequiang which seemed to to draw a line in the sand by declaring that 7% is the lowest growth rate the government will tolerate. The CPI numbers were largely in line with expectations. This suggests that the current inflation rate continues to provide the scope to cut rates further to support growth if necessary.

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