TD Securities expects China\u2019s January CPI to slow to 0.3% year-on-year, compared with a 0.4% consensus forecast. The bank links this to sharply easing food inflation after rises over the past two months.<\/p>\n
It cites wholesale food price tracking as evidence that food inflation cooled in January. It expects weaker food prices to pull headline CPI down from 0.8% year-on-year in the prior month.<\/p>\n
Services price pressures are described as weak, which is attributed to tepid demand. TD Securities says this backdrop supports the case for further policy easing.<\/p>\n
The firm expects the People\u2019s Bank of China to resume rate cuts in Q2, stating it has room to adjust monetary policy to support growth. The item notes it was produced using an AI tool and reviewed by an editor.<\/p>\n
The piece is attributed to the FXStreet Insights Team. It describes the team as journalists who select market observations from named experts and include notes from commercial sources and additional internal and external analysis.<\/p>\n
The view of softer inflation in China seems to be materializing, creating space for the central bank to provide more support for the economy. Official data for January 2026 just came in, showing consumer prices rose only 0.2% from a year ago, which confirms that price pressures from food are fading and demand remains weak. This reinforces our belief that the People’s Bank of China has a clear runway to act.<\/p>\n
We expect the PBoC to resume rate cuts in the second quarter, a pattern consistent with the easing measures seen throughout 2025 when deflationary pressures were a primary concern. This points toward potential weakness for the yuan in the coming months. Derivative traders could consider positioning for a higher USD\/CNH, possibly using options with expirations in May or June to capture the expected policy shift.<\/p>\n
The anticipation of lower borrowing costs should also provide a tailwind for Chinese government bond prices. We saw a similar dynamic last year, where bond futures rallied in the weeks leading up to the PBoC\u2019s rate cut in August 2025. Traders could look at establishing long positions in CGB futures to capitalize on this expected move.<\/p>\n
This policy outlook is driven by tepid domestic demand, which may continue to weigh on corporate earnings and the broader stock market. Considering this, protective put options on indices like the FTSE China A50 could serve as a useful hedge. The weak services price pressures mentioned are a direct reflection of this sluggish consumer activity.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" TD Securities forecasts China January CPI at 0.3% YoY as food inflation cools, supporting further easing.<\/p>\n","protected":false},"author":62,"featured_media":16961,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-41523","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/41523","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=41523"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/41523\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16961"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=41523"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=41523"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=41523"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}