Strange reasons to cheer China

January 19, 2016

So, here is the thing. The headlines on China are not that market friendly, slowest quarterly growth since 2009, or slowest growth for the year as a whole in 25 years. Yes equity markets have rallied strongly, shaking off the negative sentiment that has cloaked them for most of the year to date. One reason put forward is the expectation of Chinese stimulus. So China is in a funk because of the huge debt built up in 2008 onwards as it fought off the effects of the global financial crisis, but markets are excited because China may instigate stimulus to counteract slowdown fears. That can only mean more rate cuts or reductions in the required reserve ratio for banks. There is also scope for the currency to take some of the strain, but not yet, given the recent developments and especially on the off-shore yuan. Some of the trends of the year so far in currencies have unwound as a result, most notably the strength in the yen reversing taking USDJPY back towards the 118.00 level. Other moves have been more reluctant to unwind, such as weakness in sterling which largely remains in place, cable having displayed a very weak bounce from the 1.4250 level towards 1.43 overnight. More notable has been the reversal in USDCAD, which up to now has not seen a down day for all of this year as it has moved from 1.38 to 1.4650.

Sterling will remain in focus today with the release of UK CPI data at 09:30 GMT, where the headline rate is seen rising from 0.1% to 0.2%, the core rate seen steady at 1.2%. Sterling has clearly taken a battering for most of the year, so could be vulnerable to a short squeeze on firmer than expected data. Final data for the Eurozone is also seen at 10:00 GMT (expected steady at 0.2%). Both the ECB and BoE are expecting headline inflation to rise substantially in the early months of 2016 as the effects of the fall in energy prices a year ago fall out of the calculation (base effects, as they are called), but for both this rise is likely to be less than expected given the latest oil price developments.

Publication source
FxPro information  FxPro reviews

September 29, 2016
OPEC blinks
Yesterday decision by OPEC to restrict oil supply has pushed the price of crude higher by some 5%. The move took the markets by surprise, with the divisions between Iran (who are still enjoying their return to global markets)...
September 29, 2016
Gold weighed down by US data
The gold price is down for a second straight day today as investors await a raft of data from the US this week which may decide the question of an interest rate hike...
September 29, 2016
Informal OPEC meeting seizes limelight
Global stocks were chaotic on Tuesday with most equities vibrating between losses and gains as the mixture of anticipation ahead of OPEC - informal meeting and ongoing discussions over the results of the first presidential debate created explosive levels of volatility...

FOREX.com Rating
Orbex Rating
OctaFX Rating
XM Rating
Larson&Holz IT Ltd Rating
FXCM Rating

Beeoptions Rating
TopOption Rating
OptionRally Rating
OptionsXO Rating
Grand Option Rating
Empire Option Rating