Intraday Market Thoughts

Chinese Economy Inspires Confidence

by Adam Button
Nov 10, 2013 23:04

Weekend data from China was very close to forecasts with CPI fractionally lower than expected. The New Zealand dollar is slightly stronger to start the week while the yen lags in light trading. Japanese trade balance is on the agenda later with US and Canadian markets slowed by holidays.

Chinese weekend data gives early traders something to mull after the Australian dollar underperformance last week. Inflation ticked up to 3.2% y/y from 3.1% but it was softer than the 3.3% consensus. The government is targeting 3.5% so officials are likely comfortable with the current level.

The economy remains strong with consumers and factories expanding. Industrial production rose 10.3% y/y compared to 10.0% expected while retail sales rose 13.3% compared to the 13.4% consensus.

The market is complacent about liquidity and real estate risks to the Chinese economy, perhaps moreso than any time over the past two years. The confidence in Chinese growth may extend to fresh investment in resources.

The top item on the Asia-Pacific calendar at 2350 with is the release of September current account balance numbers from Japan. The consensus is for a 853-yen trade deficit in the month along with a 400B current account surplus. Neither report is likely to make waves in FX.

Another report to keep an eye on is Australian home loans at 0030 GMT with a 3.5% rise expected.

We send our deepest sympathies to the people of the Philippines and wish them the best.

With the ECB dragging interest rates to new lows and the Fed unlikely to taper asset purchases before end of Q1 2014, an upgraded view from the BoE is likely to bolster our positive view on GBP, as seen in the Premium Insights. Could it be a coincidence that GBP is this week's best performing currency behind the USD? All the trades in progress are in the Premium Insights.
Act Exp Prev GMT
Trade Balance - BOP Basis (SEP)
¥-885.9B Nov 10 23:50
Electronic Card Retail Sales (OCT) (m/m)
1.4% -0.8% Nov 10 21:45
Electronic Card Retail Sales (OCT) (y/y)
7.0% 3.5% Nov 10 21:45
Current Account n.s.a. (SEP)
¥400.0B ¥161.5B Nov 10 23:50
Home Loans (SEP)
4.0% -3.9% Nov 11 0:30

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