Forex Investment and Currency Trading

Summary: July data show a mixed performance of major activity indicators (China is now releasing most monthly data in one tranche each month). The highlight is further signs of rebound in private spending, supporting the view of a sustained growth recovery. The slightly weaker-than-expected July data, with slower FAI growth offset by strong retail sales growth, suggest balanced risks to market’s 8.3% growth projection for 2009.
Analysts continue to believe that quantitative measures (open market operations, moral suasion and possibly a reserve requirement hike) will be the main tools used by the PBoC to tighten liquidity and limit asset-price inflation risks. The pace of [...]

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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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