Loads Of Chinese Data This Week Should Keep Markets On Edge

Strong data from the US on Friday rocked the markets while over the weekend data from China will turn markets volatile when the Asian session begins. This week’s economic calendar is loaded with Chinese data including industrial production, retail sales and inflation numbers. On Sunday the red dragon released their monthly trade numbers which missed all expectations with both exports and imports falling. China’s trade figures missed expectations by a wide margin in October; data showed Sunday, reinforcing views that the Chinese economy will have to do more to stimulate domestic demand.

Although the PBOC has repeatedly cut interest rates, the latest data, which show another monthly drop in net trade, indicate persistent weakness in demand at home and abroad. Copper gained in the morning session on hopes of Chinese stimulus and is trading at 2.248. The Aussie dollar gained alongside the kiwi on the same dreams. The AUD is trading at 0.7045 and the NZD is up 23 points to 0.6533

In China on Tuesday, the October inflation data is issued – producer prices and consumer prices. With consumer prices up just 1.6 per cent over the year, there is scope for China to further cut interest rates.

On Wednesday in China, there is the monthly ‘download’ of activity data: figures on retail sales, production and investment. Real retail spending is growing at a double-digit annual rate.

Sunday’s trade report showed that October exports fell 6.9 percent, compared with last year, down for a fourth month, while imports slipped 18.8 percent, leaving the country with a record high trade surplus of $61.64 billion, the General Administration of Customs said Sunday.

Economists had expected dollar- denominated exports to fall 3 percent and imports to decline 16 percent, an improvement over September’s drop of 3.7 percent for exports and 20.4 percent for imports.

But the weak export numbers show that China might be getting less of a lift than hoped from overseas holiday shopping, while falling commodity import volumes highlight stubborn weakness in demand from important sectors like real estate and construction that Beijing has been trying to revive.

While the US economy is chugging along nicely after a stronger than expected jobs report which also saw a continued decline in unemployment to 5%. Perhaps more important than the headline number was the growth in average hourly earnings, which jumped 9 cents, representing a monthly gain of 0.6 percent and an annualized increase of 2.5 percent. The average work week remained at 34.5 hours. The last time wages growth was this good was back in 2009, when it was on the way down during the financial crisis. And although this is by no means a runaway rate of growth for wage inflation, it does mark a clear improvement from recent trends, and could hint that the Fed is now behind the curve as far as policy setting goes. The US dollar gained on Friday to trade at 99.39 and is slightly down in the morning session but holding gains at 99.24. The euro got a double whammy and will wait for a speech later today from Mario Draghi. The euro is steady at 107.46

The Federal Reserve watches the monthly number closely for clues about the strength of job creation and inflationary pressures, particularly from wage growth. The U.S. central bank has been saber-rattling for months regarding interest rate hikes but has yet to pull the trigger amid uneven economic data. Shortly after the report was issued, Chicago Federal Reserve President Charles Evans told CNBC the much stronger-than-expected report is “very good news” and supports his 2016 economic outlook of 2.5 percent growth.

This week data included GDP figures from the Eurozone countries and the combined GDP number while German releases inflation data. GDP and inflation are key to the next moves by the ECB. The IMF on Oct. 6 lowered its 2015 global gross domestic product forecast to 3.1 percent from 3.3 percent previously, citing a slowdown in emerging markets driven by weak commodity prices. The Washington-based group also cut its 2016 forecast to 3.6 percent from 3.8 percent. The world’s economy is growing at a slower pace than the International Monetary Fund and other large forecasters are predicting. That’s according to Nils Smedegaard Andersen, chief executive officer at A.P. Moeller-Maersk. US data is light this week and Fed speakers are quiet for the week, but a speech by ECB President Mario Draghi and also from BoE Carney could spark some market volatility. The UK will release its monthly unemployment numbers on Wednesday.