Daily digest market movers: Australian Dollar declines amidst recession fears in China

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  • China's soft Consumer Price Index (CPI) and Producer Prince Index (PPI) indicated deflationary risks.
  • CPI came in at 0.6% YoY vs 0.5% expected, while PPI declined by 1.8% YoY vs the 1.5% expected.
  • Food prices drove CPI inflation higher, but core inflation remains subdued at 0.3% YoY.
  • Deflationary risks persist, highlighting the need for fiscal measures to boost consumption.
  • On the US side, the Greenback recovered further after mixed labor market figures reported on Friday.
  • The focus is now on Wednesday’s CPI figures from August.
  • Monetary policy divergences between the Federal Reserve and the Reserve Bank of Australia may support the AUD/USD downside.

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