Morning Market Update – China May Face Setback

Asian Markets

The Federal Reserve Governor Jerome H. Powell didn’t comment on the monetary policy and the economy in his speech at the West Virginia University College of Business and Economics Distinguished Speaker Series.  Jerome Powell stated that the borrowing costs will not have a major effect with respect to the increasing bank interest rates. Fed’s Powell feels that working with only four board members is marginal in order to manage Federal Reserve’s tasks efficiently.

UK’s Prime Minister Theresa May has signed the Brexit letter to the European Union President Donald Tusk. This letter will be delivered today to Tusk by Tim Barrow, UK’s permanent representative to European Union. The Ministry of Economy, Trade and Industry said on Wednesday that the sales of retail goods in Japan rose by a seasonally adjusted 0.2% in February. However, it missed the forecasts for 0.3%.

The People’s Bank of China set the USD/CNY central rate at 6.8915 versus yesterday’s fix of 6.8782. From Moody’s previous analysis, China may face a huge economic setback from a potential property downturn. “Around 25%-30% of China’s GDP are connected to final demand from the property and construction sectors. This creates the potential for developments in the property market to have large macroeconomic effects.” says Michael Taylor, a Managing Director at Moody’s Investors Service.

Other Markets

The UBS consumption indicator, which is the most important component of Swiss GDP, will be released today. It was last seen at 1.43 and there has been some decline recently.

The Consumer Credit released by the Bank of England shows a forecast of 1.3B when compared to the previous month which stood at 1.416B. The Mortgage Approvals released by the Bank of England shows a forecast of 69.9k when compared to the previous month which was last seen at 69.928K. This data causes the decline of the pound and makes it weaker.

The Pending Home Sales released by the National Association of Realtors was seen at the bright side and looks to have recovered. The home sales are posted to be at 2.1% and were last seen at -2.8%. The EIA Crude Oil stockpiles report looks very much weaker at 1.183M when compared to the last data release of 4.954M. We end the day with the Federal Reserve Bank of San Francisco President John C. Williams’s speech.  Any positive word from Williams should add to the recovery of the dollar which has seen a fall recently.