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Coming up overnight, we have one of the more important global economic events for the week: the May Chinese inflation data.

This often affects not only the yuan but also the AUD, NZD, and JPY. With Chinese regulators keeping the onshore price of the currency in check, this data can actually have a larger effect outside of the world’s second-largest economy.

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The relevant concerns for traders are what the data will say to the PBOC as well as the Chinese government. And both of them have been trying to stimulate the economy. Inflation growth is generally associated with economic growth, so variations can affect fiscal and monetary policy.

Higher or Lower, What Does it Mean?

The reaction to the data is likely to depend just as much on why there is a change in the numbers, as the actual change itself. Higher inflation due to increased consumer demand would be in a largely positive sign for the Chinese econ...

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