Home Forex Market News Asian Session – Weak Chinese data hurt risk sentiment, aussie

Asian Session – Weak Chinese data hurt risk sentiment, aussie

Weak Chinese industrial production numbers for August depressed mood at the start of this week’s trading while the fact that Japan was on holiday meant thin volumes.  The currency that was the main loser from this development was the Australian dollar, which dipped below the 90 cent level against the greenback to mark a low of 0.8984 – a six-month low.  China is Australia’s chief export market.  This was a significant development, as the aussie is now up only around 0.85% year-to-date against the dollar compared to gains of 4-5% only a few weeks ago.  The aussie was the best performing developed currency this year but it appears that the US dollar may soon win this title.

Chinese industrial production grew by “only” 6.9% at an annual pace during August from a 9% growth rate during the previous month.  While most countries would be very jealous of such growth, it was the slowest growth rate since December of 2008 if one excludes the periods of the Lunar New Year which are distorted because of the changing dates each year.  Economists were expecting a slowdown to 8.8% and the extent of the slowdown could have serious implications for Chinese economic growth.  According to analysts, GDP growth is more likely to come in around or under 7% rather than 7.5% that was originally thought.

Fears about a Chinese economic slowdown combined with worries about the Fed changing its language this week and signaling that interest rates will need to rise, worried markets and Asian stocks together with US stock index futures fell.

There is not much data scheduled for later today with only US industrial output and capacity utilization for August on tap.  Investors will be focused on the Fed meeting later this week and on Scotland’s independence referendum.

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