China's
fourth quarter 2013 GDP number at 1.00pm today will be the headline news
through the Asian trading session Monday. There is a small TD Securities
inflation number for Australia at 10.30am but it's Wednesday's official
Australian Inflation report the market will really gravitate to regarding
Aussie inflation and not the private inflation reading this morning.
China's
growth is critically important to the pricing level of commodities and of
course the Australian dollar. If the 4th quarter China GDP number today shows
any signs of weakness in the Chinese economy the Aussie Dollar is going to come
under selling pressure once again. As I pointed out last week once the Aussie
Dollar vs the US Dollar closed below 0.88 it becomes a psychological advantage
for the sellers and the carry traders who have been buying the Aussie for long
term long trades. Those traders are the ones selling and bailing out and many
of them are Japanese.
Wednesday's
December quarter inflation reading for Australia will most likely show
inflation is at the bottom of the RBA's target band which is around 2%. Weak
inflation simply means a weaker economy but unlike the poor Aussie jobs number
last week I don't think the inflation reading (unless really poor) will have the
same negative impact on the Aussie Dollars price movement. The Chinese GDP
number today and this week’s commodity price movement have the potential to
have the biggest impact on the Aussie Dollar this week.
Don't
ever forget who runs China. It is a communist country and the communist party
run the banking system and most other things and whilst there is a chance the
GDP number could be out of line with expectation today, don't forget what the
communist party wants is usually what the communist party gets, so I don't
expect any big surprises on the GDP number today.
In the
US this week there isn't any substantial economic data to be released other
than the existing home sales on Thursday and a week full of final quarter
company earnings. Company earnings will be important for the US Dollar and
stock markets because weaker than expected company earnings will likely see
stock markets get nervous and a question mark will be put on the US economy
once again. The market expects overall company earnings growth to be around
4.9% so anything less than this the market will question.
No comments:
Post a Comment