Chinese Imports and Exports Down 12-15{01de1f41f0433b1b992b12aafb3b1fe281a5c9ee7cd5232385403e933e277ce6}, Hard Landing In The Works?
GBP/USD is currently trading at about 1.4600, the EUR/USD is at about 1.0518 and GBP/EUR is trading at about 1.3800. It was really a story at the end of last week which was about the dollar strength and we saw a bit of a bounce and then the US dollar buyers came back in with a vengeance really. We heard that the UK Industrial Production came out worse than expected at +0.1{01de1f41f0433b1b992b12aafb3b1fe281a5c9ee7cd5232385403e933e277ce6} against 0.3{01de1f41f0433b1b992b12aafb3b1fe281a5c9ee7cd5232385403e933e277ce6} expected. Obviously, it’s not good for the UK economy, but to be honest it is the least of our worries at the moment with everybody continuing to see a break before the elections as the key time. Outside polls continue to show the S&P probably having the balance of power, with questions around what all of that means.
On the Euro side, there was report out on Friday by the International Monetary Fund that was really not very complementary of the European Central Banks, talking about their selling of the Euro as they came to realize that there will quantitative easing or some further support. That added further weight to the Euro and hence the EUR/USD shifted lower over the course of Friday.
We won’t be seeing much out of the Eurozone over the next couple of days, with the main events being Wednesday’s ECB meeting decision that’s likely to show a change in the amount of quantitative easing or rates, but actually the press conference afterwards is what would be closely watched to see how the public perception is of the quantitative easing that has been done so far.
Earliest report are that further amounts of what was expected has been done, so any comments of how that is working and how that’s reacting, is likely to be closely watched in the press conference on Wednesday.
Out of the United States, we had a couple of speakers on Friday pretty much leaving each other out and some members were fairly positive about the amount of support there is for June rate hike. Some of the commenters say that there’s substantial support. I still don’t think that the generally dovish Fed rate members that we have, I still don’t think that we’ll see hike in the following month, but you’ll never know.
Narayana Kocherlakota, sent an exact opposite message as one of the voting member, but his comments is that we shouldn’t see a hike until at least the second half and even a talk about a big push into 2016. The focus might be probably that we can get something maybe towards the end of this year (Sept-Dec) or maybe into 2016, depending on how everything progresses in the Euro.
There was a very bad China data over the end of the Weekend, trade balance came in at $3 billion, a big number but it was 90{01de1f41f0433b1b992b12aafb3b1fe281a5c9ee7cd5232385403e933e277ce6} down, as it was expected at $40 billion, and $60 billion was the number last month. Clearly a pretty significant slowdown and that was on the import and export side of both of their 12{01de1f41f0433b1b992b12aafb3b1fe281a5c9ee7cd5232385403e933e277ce6}-15{01de1f41f0433b1b992b12aafb3b1fe281a5c9ee7cd5232385403e933e277ce6}. Chinese officials are already talking about that being down for Lunar New Year, which was certainly something that we saw a significant slowdown over that period. So it could be that we’ll see a bounce back. With these results, certainly Tuesday’s Chinese GDP number would be a bit more closely watched to see if there’s any sign of softening within that.
China Currency War
The post Chinese Imports and Exports Down 12-15{01de1f41f0433b1b992b12aafb3b1fe281a5c9ee7cd5232385403e933e277ce6}, Hard Landing In The Works? appeared first on Cutting-Edge FX Technology.
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