Asian equities begin trading sideways as the mild positive bias from Wall Street, following Fed Chair Powell’s dovish reiterations in US Congress are offset by key data releases from China. Asian traders will be paying attention to China’s GDP, Industrial Production and Retail Sales. These data points will show how the Chinese economy has been performing whilst Monetary and Fiscal easing chatter picks up in the country as worries with H2 growth materializes.
Adding a little bit of ammunition to the PBoC easing theme, local news now reports that China may reduce the Loan Prime Rate but not cut the policy rate on the next announcement. Local and Foreign investors and policymakers are showing concerns that a looser monetary policy could encourage heedless borrowing, which last year contributed to a surge of corporate bond defaults in two of China’s major industrial provinces.
On the trade front, China/US relations are back. Yesterday’s reports noted that the Joe Biden administration would extend the Trump-era halt on economic dialogue with China and drove some punctual defensive price action in risky and safe assets.
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© 2019 High Leverage FX - All Rights Reserved.