Tuesday update.. Chinese data looking soft

  • With Chinese trade data disappointingly weak 1st QTR. GDP is predicted to follow suit when released tomorrow. 7% or maybe lower are predicted numbers with concessions from officials that China may need more stimulus.
  • Of course you might not need to worry about any fall in Chinese stocks . They’ve developed the same way as other exchanges, that is ignore the bad news because it means more stimulus is coming.
  • It all makes you wonder who’s buying those Eurozone exports which have seemingly been improving dragging growth indicators in the region a little  better even if its not yet translated into meaningful falls in unemployment.
  • Some risk off yesterday which has helped the JPY pick up while elsewhere the EUR has drifted lower. That’s meant EUR/JPY down at 126.10 and looking like 130 is a distant memory. I still expect GBP to keep up but yesterday it was the EUR that continued to take all the selling pressure.
  • Something a little interesting is this Zero Hedge article on credit. It seems that data is pointing very clearly towards an economic slowdown so just maybe those worries about a Fed hike may turn towards you know what. Yes maybe the QE 4 camp will be right. What then for the USD ? Stocks will love it though.
Market summary
  • Forex..AUD played catch up ( weakness ) on poor Chinese data now 0.7580 over 1% lower from Fridays close. EUR/USD has also continued to slide quietly down at 1.0550 . I still don’t buy quick move to parity but with Greece still unsolved EUR bears don’t seem to have much to fear right now. I still expect GBP to suffer pre and post election. USD/JPY back under 120.00 and I continue to expect JPY gains on crosses even after any general turn in the USD.
  • Equities..All a bit mixed as some profit taking set in after the Chinese Trade data but less so in Asia where more stimulus is now expected.
  • Bonds..Not much change US 10 YR. a whisker lower yield at 1.92 but with Germany now at 0.14 , mind the gap as they say.

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