BHP Warns on China, Investment; UK CPI Upcoming

The Australian dollar slumped in Asia after officials at BHP Biliton lowered expectations for Chinese steel and said they are reconsidering Australian investment plans. The US dollar is outperforming after a decent-sized fall in NY trading. UK inflation data is the highlight of European trading. The latest Premium trades are below.

Officials from BHP, the worlds largest mining company, appeared in two separate stories. The first was the company chairman telling the Australian Financial Review that its reassign capital spending plans in light of uncertainty about China. The second was the CEO saying Chinese steel growth has flattened and that the big infrastructure build has come to an end.

Given the uncertainty about the accuracy of Chinese statistical data, the market is much more apt to believe comments from corporate executives about the health of Chinas economy than officials. AUD/USD was trading at 1.0625 when the story broke and fell to a weekly low of 1.0552 as it circulated. Low liquidity due to a Japanese holiday may have exaggerated the move.

The RBA minutes earlier helped AUD as officials said downside risks were less likely than before. The overall tone was upbeat, in line with commentary from other global central bankers. There was minimal concern about inflation so the policy bias remains toward cuts, even if the market is beginning to lean in the other direction.

European Preview

The top event comes at 0930 GMT when the UK releases CPI figures for February. The year-over-year rate of inflation is expected to slide to 3.3% from 3.6%, with core at 2.3% compared to 2.6% in January. The trend in UK inflation has been downward since peaking at 5.2% in September and a small setback is unlikely to rile markets. Data on the UK RPI and German producer prices (at 0700 GMT) are unlikely to move the market.

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