AUD/USD keeps gains after big beat on China inflation data

• AUD/USD remains bid after big beat on China inflation data. 
• The CPI rose 1.4% month-on-month in January and the PPI rebounded 0.1% as expected. 
• The Aussie dollar is likely tracking the recovery in the S&P 500 futures.

AUD/USD continues to trade in the green following a better-than-expected China inflation data for the month of January

China's inflation, as represented by the consumer price index (CPI), rose 1.4% month-on-month in January, beating the estimate of 0.8% and up from December's unchanged reading. The annualized reading came in at 5.4%, beating the expectations for a 4.9% rise. 

Meanwhile, factory-gate inflation or producer price index rose 0.1% as expected, following December's 0.5% slide.

With CPI rising, the PBOC and the government may have a tough time countering the coronavirus-led slowdown with aggressive stimulus measures. 

Even so, the AUD/USD is holding on to the gains seen in early Asian and could rise further, as the factory-gate inflation bettered estimates. The AUD/USD pair rose from 0.6665 to 0.6680 ahead of the data release and is now trading at 0.6685. 

The AUD/USD pair seems to have risen from 0.6665, tracking the recovery in the S&P 500 futures, which are currently trading largely unchanged on the day, having dropped by 0.5% in early Asia. 

On Friday, AUD/USD fell to 0.6658, the lowest since 2009, as the dollar picked up a bid on the back of a strong US Nonfarm payrolls figure. At the same time, the news of the rising number of infections overshadowed the jobs data and kept equities under pressure, adding to the bearish tone around the AUD. 

Technical levels