chinas horrid start to q3 997802015
<p>The pressure in on the Chinese government to introduce more stimulus to offset soft local and international demand. The economy appears to have started the […]</p>
Share this:
The pressure in on the Chinese government to introduce more stimulus to offset soft local and international demand. The economy appears to have started the second half of this year on a very sour note, with a sharp deterioration in producer prices and export and import growth. Combined with the volatility still present in China’s stock markets, the latest batch of soft trade and PPI numbers increase the likelihood of further stimulus from Beijing.
China’s exports fell 8.3%y/y, completely missing an expected 1.5% drop, and imports fell for the ninth month in a row in July (-8.1% y/y). Clearly the domestic economy is struggling from a lack of demand, both from within China and globaly, and a relatively strong currency. This is further evidenced by a fall in producer prices in July to their lowest level since 2009. The PPI fell 5.4% y/y last month, extending 61 months of straight declines.
This may be catastrophic for short-term growth and is a poor start to the second half of the year. The pressure in on the PBoC to loosen its grip on the exchange rate and let it depreciated to support the struggling export sector, but the bank may not give into the pressure. Nonetheless, there may be some more help on the way from the fiscal side of the equation, with the government expected to expand infrastructure spending in coming months.
AUD/USD
The Australian dollar didn’t react heavily to the news out of China, largely due to the prospect of further stimulus from Beijing on the back of the data. The aussie also had an overall slightly positive reaction to US employment numbers on Friday. The headline figures were not too bad, with the only real disappointment being softer than expected wage growth. The overall impact on the US dollar appears to have been slightly negative, although AUD is giving up some of these gains early in Asia.
Source: City Index
Related tags:
Latest market news
Open an account in minutes
Experience award-winning platforms with fast and secure execution, and enjoy tight spreads from 0.5 pts on FX and 0.3 pts on indices.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.forex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.