China’s Economy Slows but Could Have Been Worse. Next up, Brexit

While China’s economy slowed in the 3rd quarter, things could have been much worse. Relief all round as focus now shifts to Brexit…
Bob Mason
Parliament

Earlier in the Day:

It was a particularly busy day on the economic calendar through the Asian session this morning.

Japan’s September inflation had limited influence in the early part of the day.

Economic data out of China was the main area of focus, however. Key stats included 3rd quarter GDP and September industrial production figures.

Of less influence on the day were September’s fixed-asset investment and retail sales figures.

For the Japanese Yen

The annual rate of inflation eased from 0.3% to 0.2% in September, according to figures released by the Ministry of Internal Affairs and Communication. Economists had forecast an annual rate of inflation of 0.4%. The annual rate of core inflation came in at 0.3% in September, which was in line with forecast, whilst down from 0.5% in August.

The Japanese Yen moved from ¥108.568 to ¥108.554 upon release of the figures. At the time of writing, the Japanese Yen was up by 0.01% to ¥108.65 against the U.S Dollar.

Out of China

The Chinese economy grew by 6.0% in the 3rd quarter, year-on-year, which was worse than a forecast of 6.1%. In the 2nd quarter, the economy had grown by 6.2%. Quarter-on-quarter, the economy grew by 1.5%, which was in line with forecasts. The economy had grown by 1.6% in the 2nd quarter.

While the year-on-year GDP number was a negative, industrial production saw a jump in September. Year-on-year, production rose by 5.8%, coming in well ahead of a forecasted 5.0% rise. In August, production had risen by 4.4%

The Aussie Dollar moved from $0.68241 to a high $0.68377 upon release of the figures. At the time of writing, the Aussie Dollar was up by 0.13% to $0.6833.

Elsewhere

The Kiwi Dollar was up by 0.36% to $0.6370.

The Day Ahead:

For the EUR

It’s another quiet day ahead on the economic calendar. There are no material stats due out of the Eurozone to provide the EUR with direction.

The lack of data will leave the EUR in the hands of Brexit chatter and market sentiment towards the global economy.

This morning’s stats from China and the continuation of tariffs on Chinese goods will test risk sentiment, as will the threat of tariffs on EU goods.

With the Parliamentary vote tomorrow, however, it will be Brexit front and center on the day.

At the time of writing, the EUR was down by 0.03% to $1.1122.

For the Pound

It’s also a quiet day ahead on the data front. There are no material stats to provide the Pound with direction on the day.

The lack of stats leaves Brexit in focus as the UK Parliament prepares to vote on the latest deal. Uncertainty over whether Parliament would push through the deal may limit any upside in the Pound, however.

News hit the wires on Thursday that the DUP were going to vote against the latest deal in Parliament on Saturday. It’s yet unclear whether Boris Johnson has managed to get the necessary support for a deal that would ultimately prevent a general election and a possible hard Brexit. There has also been the talk of a 2nd referendum in recent weeks.

At the time of writing, the Pound was down by 0.25% to $1.2859.

Across the Pond

It’s a quiet day ahead on the economic calendar. with no material stats due out of the U.S to provide direction.

The lack of stats will leave geopolitics in focus on the day. Expect some upside for the Dollar should there be any negative chatter on Brexit.

While the U.S and China made progress in trade talks, the fact that trade tariffs remain continues to be negative. Trump is also expected to begin threatening the EU with tariffs, which will also be a test for the markets.

The U.S – China trade war has been a negative for the Dollar, it would be a different story should a U.S – EU trade war ensue.

The Dollar Spot Index was up 0.01% to 97.620 at the time of writing.

For the Loonie

It’s also a quiet day on the economic calendar, with no material stats due out of Canada to provide direction for the Loonie.

This morning’s stats out of China and risk sentiment through the U.S session will provide direction. China’s stats could have been worse, which should be taken as positive.

The Loonie was up by 0.01% at C$1.3136, against the U.S Dollar, at the time of writing.

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