China reported a growth rate of 7% in Q2 2015. This beat expectations for 6.9% and remained in line with the government’s target.
There is no slip to lower growth in the world’s No. 2 economy and this is good news for the the Aussie, which is moving away from lower ground.
Also other figures beat: industrial output rose 6.8%, contrary to 6% expected and 6.1% in Q1. Fixed Asset Investment is up 11.4%, better than 11.2% predicted. Retail sales are up 10.6%, above 10.2% that was on the cards. This shows some signs of the much needed “rebalancing”.
AUD/USD reacted positively. It was already rising above 0.7430 before the publication and it reached 0.7487 afterwards, before losing some ground.
China is Australia’s No. 1 partner and remains critical despite the fall in commodity prices. Together with the good Australian employment data, the Aussie may have found a bottom, at least for now. On the other hand, the RBA always wants a weaker Aussie and when a Fed hike eventually comes, we could have another move lower with some seeing 0.70 as the next target.
Here is how it looks on the chart.
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