China’s economy expanded 6.9 percent in the three months through September from a year earlier, beating economists’ estimates by 0.1 percent. Although the expansion was the slowest since the first quarter of 2009, the data suggests that China’s monetary and fiscal stimulus is supporting growth and keeping Premier Li Keqiang’s 2015 expansion target within reach.
China’s GDP expanded 7.3 percent last year, the slowest pace since 1990, and at 7 percent in each of the first two quarters of this year. Beijing has set a target of ‘around seven percent’ for growth this year.
Industrial output in September rose 5.7 percent from a year earlier, compared with economists’ median estimate of 6 percent. Retail sales increased 10.9 percent, versus a 10.8 percent gain forecast for the month. Fixed asset investment, a measure of government spending on infrastructure, expanded 10.3 per cent on-year in the January-September period.
The government has cut interest rates five times since November and boosted infrastructure spending in recent months to keep growth from sliding too far below this year’s target for about 7 percent.
China affects the world more than ever, with Federal Reserve Chair Janet Yellen last month citing concern about the world’s second-largest economy among reasons for holding off from raising interest rates. China accounted for 13.3 percent of global GDP last year, from less than 5 percent a decade earlier, according to World Bank data.
In a bid to remodel it’s economy, China has been steadily pulling out of US bonds. This year alone, China’s holdings have fallen about USD200 billion as it raises money in support of its flagging economy and stock market. The good news for US is that other investors, both local and international, have swung back to bets that Treasuries will strengthen, as the yield on benchmark 10-year notes hovers near 2 percent.
Hedge funds and other large speculators held a net 17,692 bullish positions in US government bonds in the week to 13th October, from 2,543 net bearish contracts in the previous period. Ten-year Treasuries advanced on Monday, sending yields down closer to the 1.97 percent they reached on 14th October, the lowest close since 27th April.
US debt has rallied over the past month as bets receded that the Federal Reserve will make its first first interest-rate hike this year since 2006. This has caused large funds to move into the safety of US Treasuries, causing their yield to fall.
Top News This Week
GBP: Retail Sales m/m. Thursday 22nd October, 4.30pm.
I expect figures to come in at 0.3% (previous figure was 0.2%).
EUR: German Flash Manufacturing PMI. Friday 23rd October, 3.30pm.
I expect figures to come in at 51.6 (previous figure was 52.3).
CAD: Core CPI m/m. Friday 23rd October, 8.30pm.
I expect figures to come in at 0.1% (previous figure was 0.2%).
Long NZD/USD at 0.6803
On the H1 chart, NZD/USD is moving in a range after an uptrend. The price has just bounced off the support level of 0.6782 and it continuing its move up. We will go long as we expect the NZD/USD to continue moving upwards, continuing the momentum in the prior trend. We will go long once prices touch 0.6803. A stop loss of 55 pips is placed below the last low and we will have two targets on this trade, exiting the first position at 0.6858 and the second one at 0.6913.
Entry Price = 0.6803
Stop Loss = 0.6748
1st Profit = 0.6858
2nd Profit = 0.6913