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China’s gross domestic product shrank by 6.8%. It’s the lowest level that was witnessed since 1992, notably the start of official reports.
Not really! It wasn’t a surprise for anybody as the country had the national lockdown. Actually, the GDP releases quarterly. So, let’s look at more recent data. The March industrial output showed the signs of recovery. It fell only by 1.1%, 7 times less than expected! This is an encouraging rate.
“First in – first out”, commented the Chief China Economist. According to him, 90% of factories are fully operational now.
Also the 800 billion dollar stimulus package is on the way to support the economy as investments decreased by 16.1%.
Here’s the problem. Retail sales plummeted by 15.8%. Consumers are not ready to spend their money yet. Even if they are ready, there is the social distancing restriction, that makes shopping or eating in a restaurant unworthy. However, these tough rules will be eased soon. It’s expected that the consumer behavior will be normalized to the third quarter of 2020. Moreover, the external demand is quite low too as other countries are still on lockdowns.
After the China’s GDP release USD/CNH rose sharply from 7.06935 to 7.08430. Recent highs are 7.08915 and 7.09365.
AUD/USD fell from 0.6383 to 0.63245 because of the poor Chinese GDP data. The recent bottom line is on 0.62665.
The US dollar index keeps rounding above the 103.60 historical support level. The buyers have already defended this level for three weeks, highlighting their interest in the greenback. Thus, buying USD looks less risky right now.
On the H4 timeframe, the US dollar index has formed a bullish falling wedge. At the beginning of the trading session, the price is testing the upper border of this wedge. Thus, in case of a higher-than-expected Core PCE Price Index m/m, the US dollar will skyrocket against other currencies.
Happy Wednesday, traders! We went through the Internet and found the best news for you, take a look!
This week may be the most important since the year started as the Fed assess the economic outlook and the US presents fresh NFP readings.
S&P Global, a private banking company, will release a monthly change in British Flash Manufacturing Purchasing Managers Index (PMI) on January 24, 11:30 GMT+2. The index is a leading indicator of economic health as businesses react quickly to market conditions, and purchasing managers hold the most current and relevant insight into the company's view of the economy.
The United States Bureau of Labor Statistics will publish the US Consumer Price Index (CPI) m/m on January 12 at 15:30 GMT+2. The index measures a change in the price of goods and services purchased by consumers.
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