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Chinese Data Misses Slightly But Comm Dollars Remain Bid

Last updated 10/22/2009 2:40 AM ET (GMT -5) 0 Comments - Add your comment

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Boris Schlossberg

Director of Currency Research, GFT

Chinese economic performance data showed an increase across all measures but missed expectations triggering a modest sell off in G-10 growth currencies. Chinese GDP printed at 8.9% versus 9.0% expected, Industrial Production rose at 13.9% rate versus 12.3% the period prior and Retail Sales matched expectations printing at 15.5%.

The market anticipated hotter data with whisper numbers last night suggesting that Industrial Production would rise at 14.1% rate while GDP would expand at 9.1%. As a result the Anglo-Saxon currencies in Asia Pacific sold off on the news with Aussie dropping to .9220 from .9280 while kiwi came within a few pips of the .7500 figure after rising to .7590 ahead of the news.

We warned yesterday that “the greatest danger (of a miss)  lies in the commdollar currencies of Asia Pacific which are very closely tied to Chinese demand .“ Nevertheless, today’s Chinese data was generally impressive and most importantly total trade numbers stabilized with foreign trade down 10.1% compared to a year ago but up 14.2% from August. The Chinese Bureau of Statistics noted that “The foreign trade continued to drop but the decrease rate obviously lowered.  In the first three quarters of this year, the total value of imports and exports was US$ 1,557.8 billion, down 20.9 percent year-on-year. Of this total, the value of imports and exports in the first quarter down 24.9 percent, second quarter down 22.1 percent, and third quarter down by 16.5, with obviously narrowed declining rate.”

Overall, today’s data out of China remains supportive of the recovery trade as the fourth largest economy in the world continues to record impressive growth. The news today may temper the interest rate expectations for Australia and New Zealand as it suggests no serious overheating in the Chinese economy and therefore little need for rapid tightening of monetary policy in the two Anglo Saxon economies of Asia Pacific.  Still the over trend of growth continues unimpeded and that bodes well for further appreciation of the Aussie and kiwi.

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About The Author

Boris Schlossberg began his Wall Street trading career more than 20 years ago at Drexel Burhnam Lambert. There, he traded nearly every type of financial product on the market in the U.S., from equities and options to stock index futures and foreign exchange. His innate ability to analyze market information and use it to trade has helped him become an industry-recognized, “go to” trading professional.

These days, whenever the markets move, many organizations turn to Schlossberg for his take on the situation. He is a weekly contributor to CNBC's Squawk Box and a regular commentator for Bloomberg radio and television. His daily currency research is widely quoted by Reuters, Dow Jones and Agence France Presse newswires and appears in numerous newspapers worldwide. Schlossberg has written for publications like SFO magazine, Active Trader and Technical Analysis of Stocks and Commodities. He is also the author of Technical Analysis of the Currency Market and the co-author of Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game with Kathy Lien. He joined GFT in 2008.