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China GDP overview

China’s latest GDP release is being dropped on Monday traders at 02:00 GMT, and the broad market forecast is calling for the q/q GDP figure for 2018’s Q2 is expected to tick upwards from 1.4% to 1.6%, while the y/y overall figure is anticipated to mark in a slight decline, forecast to slip from 6.8% to 6.7%. Alongside China’s GDP reading, Retails Sales and Industrial Production numbers will also be released on markets, and as noted by Nomura analysts, a slowdown in June’s Caixin PMIs are supporting their view of a slowdown in the headline GDP figure: “we expect China’s real GDP growth to slow in Q2 after staying stable for the past three quarters;  We expect real GDP growth to slow to 6.7% y-o-y in Q2 from 6.8% in Q1, given signs of growth momentum losing steam in Q2;  High-frequency data (growth of coal consumption by six power plants and crude steel production) and weaker-than-expected official and Caixin June PMIs add conviction to our slowdown view.”

Nomura continued with their  data expectations on Industrial Production: “we expect industrial production growth to moderate further to 6.6% y-o-y in June.  Deleveraging over the past year should continue to weigh on investment, and we expect fixed asset investment growth to slow to 5.9% y-o-y ytd.” Finally, Nomura also weighed in on Retail Sales expectations, “retail sales growth may rebound mildly to 8.8% y-o-y in June from a much weaker-than-expected 8.5% in May, partly driven by price factors.”

How could it affect the AUD/USD?

The Aussie is pushing upwards ahead of China’s GDP reading, marking out territory near 0.7425 above Friday’s high, but the pair still remains constrained by bearish factors, and  according to FXStreet’s Valeria Bednarik,  “technically, the daily chart offers a neutral stance, as the pair finished above a horizontal 20 DMA, but far below bearish larger ones, while technical indicators head north, but the RSI currently at 49. Shorter term, and according to the 4 hours chart, the technical picture is quite alike, as indicators entered positive territory but lost upward strength, while the pair settled above a bearish 20 SMA and a flat 100 SMA, but remains below a mild bearish 200 SMA.”

Support levels: 0.7370 0.7340 0.7310

Resistance levels: 0.7445 0.7490 0.7525

Key notes

AUD/USD analysis: Chinese growth to set Aussie’s tone

Australian dollar bounces with emerging markets

About the Chinese GDP reading

The Gross Domestic Product (GDP) released by the National Bureau of Statistics of China studies the gross value of all goods and services produced by China. The indicator presents the pace at which the Chinese economy is growing or decreasing. As the Chinese economy has influence on the global economy, this economic event would have an impact on the Forex market. Generally speaking, a high reading is seen as positive (or bullish) for the CNY, while a low reading is seen as negative ( or Bearish).