Forex News – China’s Growth Numbers Generating Optimism |
China’s economic growth in the second quarter managed to end the sharp selloffs that were triggered in the markets this week. the Chinese economy expanded by an annualized 9.5%, above the median estimates of 9.3%. This spread optimism across the broad markets and the safe heaven dollar lost pace.
The better than expected growth numbers from China increased believes that exports will remain strong, compensating for the fears triggered by the European debt crisis that might spread throughout the region including Italy and Spain, and the U.S. pessimistic recovery outlook.
However caution will certainly prevail as traders are still concerned over the outlook of the European debt crisis while the overall global economic conditions are still weak. Thereby demand for the low yielding assets including the dollar and the yen may be triggered at any moment.
Europe released a negative industrial production today while U.K released a lackluster jobs report for June, which added to the downside pressures on the GBP, yet the relief given by China's growth numbers offset the bearish pressures from the jobs report as the pound moved higher hovering around 1.5945.
The sentiment will remain fragile on contagion fears in Europe and ahead of Bernanke’s semi-annual testimony, where he might hint more monetary easing and a possible QE3 since recovery slowed in the U.S. the dollar index sharply today to the lowest of 75.48 from the opening at 76.01.
The euro rose to the highest of 1.4110 although Moody’s downgraded Ireland to Junk yesterday, following a similar move on Portugal last week. The EU leaders might hold an emergency summit this Friday after the finance ministers failed to provide a clear solution for Europe's crisis.
Commodities managed to gain since yesterday after China reported a better than expected growth numbers which pushed the dollar lower. Thereby gold climbed to record highs and as of this morning finds itself around $1572.00, while oil is trading with an upside bias around the $97.30 level.
Originally posted here.
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