Monday provided a relatively stable commencement to the trading week, locally we were devoid of any economic data and the markets as a result remained trading within a limited range against all majors.
The markets were solely focused on China with the release of volume high level data out of Australia’s largest trading partner with mixed results between data indicators. China released their Gross Domestic Product (GDP) figure which came in slightly better than the expectation however a further reduction on previous figures with a growth figure year on year of 6.9%. Previous quarter’s figure was 7.0% and the forecast had been for 6.8% for the July to September period. As the world’s second largest economy the growth of this country has rippling effects on most of the developed economies.
The figure whilst a decline for China was not unexpected, the Chinese government has been preparing the market for this downgrade in their growth target. Over the weekend Chinese Premier Li Keqiang said that with the global economic recovery losing steam, achieving domestic growth of around 7 percent was “not easy.” At the time of the release the market appeared mostly unaffected by this figure with no significant market movements to follow.
At the same time China also released Industrial production which came in lower than the previous result and lower than the forecast of 6.0% with a result of a 5.7% down from 6.1% as the previous reading. Retail sales however provided some positivity with a result of 10.9%, a slight increase from the forecast and previous which were both 10.8% which provided some reassurance for traders in the mind-set of consumers within the country.
Offshore there was a lack of high tiered data and the markets will look to the week ahead for the basis of their decisions on trading. Today will provide the only key release for Australia for the week with the release of The Reserve Bank of Australia’s (RBA) Monetary Policy Meeting Minutes out today at 10:30 am from the October Official Cash Rate (OCR) decision were rates were again kept on hold.
The Australian Dollar to Canadian Dollar (AUD/CAD) Exchange rate has made some recovery from the 5 year lows seen during the month of September were it fell into the 0.91’s. This month it has been trading within a range of 0.9262 to a high of 0.9579 assisted by poor Consumer Price Index Figures out of Canada near the end of September. This slowing of their CPI figure will be a point of discussion with the Bank of Canada’s (BOC) Monetary Policy Report and Rate Statement out Wednesday night. Their official cash rate is currently at 0.50% however the BOC, with weak CPI figures, any discussion of further rate adjustment may lead to a sell-off of the ‘Loonie’. The Australian Dollar to Canadian Dollar (AUD/CAD) Exchange rate is currently trading at 0.9436 at 8:30 AM AEST Today.