Today’s economic data release of February Retail Sales and February Industrial Production provide a clear picture of the Chinese economy. This article, 14 March Chinese Retail Sales – Economic Growth Outlook gives a detailed report.
14 March, Swissquote – This morning, the US dollar erased partially yesterday losses caused by another disruption in the Trump administration. Indeed, on Tuesday, the greenback fell sharply as Donald Trump fired his Secretary of State, Rex Tillerson, and named CIA director Mike Pompeo for the job.
The decision spurred widespread uncertainty in financial markets. Asian equity indices lost ground with the Nikkei and Hong Kong’s Hang Seng falling 0.87% and 0.53%, respectively. The greenback retreated against most of its peers with EUR/USD rising to 1.2413 and USD/CHF sliding to 0.9425.
EUR slides amid cautious Draghi
I find quite surprising that the FX market reacted to the news, as the economic consequences of the decision are difficult to determine. This could explain why the US dollar bounced back this morning. In addition, this morning, Mario Draghi spoke at the ECB and sent the euro lower.
The ECB president said the central bank would remain cautious not to kill the fragile but positive momentum in inflation, saying that the “monetary policy will remain patient, persistent and prudent”. The single currency fell to 1.2364 against the greenback, while EUR/CHF held steady around 1.17.
Overall, and in spite of intraday spikes in volatility, the FX market has been relatively calm since mid-January, which suggests that investors are impatiently waiting for the Fed to set the tone. It will be Jerome Powell’s first full meeting (i.e. press conference and forecast update) and investors will try to find any subtle change in tone and wording with respect to Janet Yellen last press conference. There are less than two weeks of waiting.
14 March Chinese Retail Sales – Economic Growth Outlook
Following recent reforms in Chinese Government and growing regulatory power of People’s Bank of China with the aim of improving stability either from a political and financial standpoint, today’s economic data release of February Retail Sales and February Industrial Production are given at 9.70% (previous: 10:20%) and 7.20% (previous: 6.60%) respectively.
These recent releases provide clear signs of a slowdown as to the consumption of goods and services within the country while industrial production continues its rise at a constant pace, boosted by electric utilities (+13.30%) and manufacturing activities (+7%).
Slowing Economic Growth
Recent releases of February Trade Balance (USD -5.70 billion) and February Producer Price Index (3.70% against 4.30 in the previous month) confirm the tendency of a slowing economic growth, suffering from sharp headline inflation (2.90%, its highest rate since 2013).
Another growing issue regards existing shadow banking business valued at USD 70 trillion and confirming the need for stringent and rapid reforms, in order to avoid any debt crisis in the near term.
Markets reacted rather softly following recent reform announcements as Chinese Hong Kong Hang Seng and Shanghai Composite were trading flat, losing steam following recent Trump’s administration personnel shakeup on Tuesday (Hang Seng: -1.70%, Shanghai Composite: -0.89% since Monday).
This article 14 March Chinese Retail Sales – Economic Growth Outlook was written by Arnaud Masset & Vincent Mivelaz, analysts at Swissquote. While every effort has been made to ensure that the data quoted and used for the research behind this document is reliable, there is no guarantee that it is correct, and Swissquote Bank and its subsidiaries can accept no liability whatsoever in respect of any errors or omissions, or regarding the accuracy, completeness or reliability of the information contained herein.
This document does not constitute a recommendation to sell and/or buy any financial products and is not to be considered as a solicitation and/or an offer to enter into any transaction. This document is a piece of economic research and is not intended to constitute investment advice, nor to solicit dealing in securities or in any other kind of investments.