Small mercies in the case of Chinese GDP

15.19 AEST, Friday 13 July 2012

Small mercies in the case of Chinese GDP
By Tim Waterer (Senior Trader, CMC Markets)

Markets found a reprieve in the way of Chinese GDP data today, and while the data was far from spectacular there were some fears that it could have been worse.

Traders took heart from the fact that real GDP was higher than forecast and this provided markers across Asia with some buying impetus, an occurrence which has been distinctly lacking this week. The headline GDP print of 7.6% was far from jaw-dropping stuff however it was a case of small mercies for the market with risk assets able to claw back some ground.

We had a rare phenomenon on the ASX200 today with stocks trading in green numbers rather than the colour red we have become accustomed to this week. Sooner or later the drought had to break and after breathing a sigh of relief that the Chinese numbers were not worse than feared, our market made a modest push higher.

However traders are still overwhelmingly favouring lower-risk assets with so much concern still circulating over the rate of global growth for the remainder of 2012. The US Dollar is likely to see a continuation of safe-haven flows until we see an emergence of economic data which provides reason for optimism.

The Australian Dollar had a mild push higher following the Chinese numbers however it is still having a tough time shaking Thursday’s employment data, with the chances of an August rate cut having risen somewhat. If we see another soft outing on the US equities market we may see the AUDUSD rate gain on the cusp of a slip below the 1.01 level.

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