Chinese Industrial Production Beats Estimates

The Chinese Industrial Production for the month of August came in at 6.3% y/y against the expected 6.2%. This beat the market expectations though the data has to be taken with a pinch of salt in terms of its authenticity. The market always doubts the data coming out of China and believes that all the data are government controlled and hence tuned to suit its taste.

Nevertheless, this good data should provide a boost to commodity currencies like AUD which has been at the receiving end lately due to the bad data coming out of China and also due to their interest rate cycles.

In other news, the FOMC blackout period has begun which means that we do not need to hear any more contradictory comments from the different FOMC members. What they say generally has a huge influence in the markets and have generally been big market movers . But the blackout period usually starts 1 week before the actual meeting which forbids the FOMC members from making any statements to the media. This would help to calm the markets. This effect was immediately seen yesterday when the US markets recovered and the USD strength waned with the realization that there may not be any hike in September after all. The Euro and the pound gained handsomely against the USD and this ranging is expected to continue till the meeting minutes are announced.