What’s Inside the Chinese Government Report?
A Bullish Report From The Chinese Government
There was article in today’s edition of “People’s Daily” that had a paragraph on Chinese growth going up to 7% (projections for this year). It is provided by an analyst from the State Council’s Research Centre and based on a view that the growth is ’stable and trending for the better’ and that the demand is stabilizing.
The newspaper is considered a tool of the government to highlight its main policies and how it wants to shape the public opinion which means that the markets may attribute high importance to such news as the one on growth. Current market median of forecasts is 6.5% for 2016 and 6.3% for the next two years. The 2Q GDP surprised on the upside at 6.7% (the expectations were 6.6%) We can also observe quite positive reaction on Hang Seng and Shanghai Composite main indices both up around 1% on the day.
The GBP moves lower on Comments from the Bank of England’s Weale
The British Pound is moving lower to suggest the Bank of England’s Weale (comments) reported in the FT are having more of an impact. Rate policy considerations have been a key driver given the Pound has already suffered significantly on the uncertainty factor, but with the weak PMIs on Friday, the CBI business optimism index yesterday and now the latest BoE reaction, we look set for a more aggressive test on the downside, with a large chunk of this going through the EUR/GBP rate. .8425 has been capping the cross rate in recent sessions, but with EUR/USD also pushing north, we look to extend levels here. Cable support anticipated in the mid 1.3050’s, then again just ahead of 1.3000, while much stronger bids said to be lying in wait in the mid 1.2900’s.
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