Chinese Economic Growth Supports the AUD

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This morning, investors saw the Chinese second quarter gross domestic product (Q2 GDP) which beat expectations. This supported the AUD/USD Forex market.

The Chinese Q2 GDP expanded 6.9 percent, annually. This was just better than the 6.8 percent expected. This was also the same rate of growth shown in the first three months (Q1) of 2017. Beijing target for economic growth s above 6.5 percent this year. This comes after last year’s 27 year low of 6.7 percent.

Investors are worried that increased focus on debt levels and financial regulation could weaken the Chinese economy’s second quarter growth rate. This is not the case. The statistics office said that first half growth has laid down a rather “solid foundation” from which to build. The Chinese government did note that many ‘uncertainties’ remain.

Other Chinese Data is Rather Strong Today

In other data, out of the world’s second largest economy, industrial production, for June, came in strong. There was an annual growth rate of 7.6 percent which was well above the 6.5 percent rate of growth that the markets expected. This number was supported by a record in steel output. There has been accusations of Chinese steel dumping, by US President Donald Trump in particular, that have been made in western countries. These accusations are giving way to an increase in protectionist rhetoric. This, so far, ha not been backed by action.

Retail sales were strong too. They rose 10.6 percent.

Overall the data shows China heading into the year’s second half in pretty good shape. Worries about debt will keep investors worried. Overall public and government debt levels are close to 230 percent of GDP.

David Frank

David Frank

Chief Market Strategist at CupO'Forex
David has his MA and PhD in Economics. He is a technical analyst who has been trading in the Forex world for over a decade. As an analyst and trader, David believes in the big picture by blending together technical analysis with the fundamentals behind the scenes in the Forex and Bond markets. David’s trading strategy is unique. He blends an understanding of fundamental and macroeconomics with technical analysis to offer a unique view into Forex. He applies several strategies including carry long positions, to take advantage of high yields in non-volatile markets, as well as using quicker, chart related analysis for day trading.
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