Forex Investment and Currency Trading

China

GDP growth on a year-on-year basis fell to 6.1% in the first quarter, its lowest level since the fourth quarter of 1999. Growth had been 6.8% in the fourth quarter. The important caveat is that it appears that on a quarter-to-quarter seasonally adjusted basis, growth rebounded strongly (5-7%) from the fourth quarter – when it was thought to be close to zero.
Growth in urban fixed asset investment jumped to a cumulative 28.6% in the first three months of the year from 26.5% in January-February – which would imply growth of 32.9% in March (all on a year-on-year basis). The essential [...]

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Macro-economy
After six years of strong growth, China policy makers are bracing themselves for much tougher times. The economy has been hit by an external demand shock, the effects of domestic tightening in H1-2008, a commodity boom and bust, and a housing market slump and price correction. By the end of 2008, some 20mn had lost their jobs in the export sector, reportedly bringing total unemployment to around 40mn (8% of the labour force) – and rising.
Since September 2008, the government has loosened policy aggressively, cutting interest rates and freezing exchange rate appreciation (at least against the USD). A fiscal stimulus [...]

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On 14-15 November, China’s President Hu Jintao will be in Washington, sitting around a big table talking with other G-20 leaders about the world’s new financial architecture. It is right that he and his super-senior team will be in the room. China is a major player in the world economy and a huge influence in the world’s financial markets, and will of course play an important part in implementing any decisions made. As a meeting of the leaders of all the G-20 economies, the summit has been compared with the Bretton Woods meetings in New Hampshire in July 1944. Then, [...]

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Beijing has changed course: goodbye tightening, hello stimulus. Today, the People’s Bank of China (PBoC) cut lending rates by 27bps, but kept deposit rates stable. The central bank also cut the reserve requirement for all but the five largest banks by 100ppts to 16.5%. It goes without saying that this came as a big surprise.
The move is likely triggered by rising concerns about China equities and the macro-economy in general. The timing likely has something to do with the Asian equity market sell-off today, on the back of the Lehman collapse and fears of more financial contagion in the US. [...]

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