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China Data to Determine Australian Dollar and New Zealand Dollar Forecast

August 8, 2016 - Written by Minesh Chaudhari

AUD, NZD Forecast: Chinese Data to Trigger Currency Market Movement



All has been relatively quiet on the Chinese front since the flurry of panicked activity from global investors which saw equities markets slump during the early part of this year. However, this could be about to change with the publication of two highly significant data sets from the world’s second largest economy during the first half of this week.

Chinese Yuan (CNY) Exchange Rate Volatility Expected on GDP Data



Rumour has it that China’s leader Xi Jinping holds so little faith in the veracity of official headline GDP growth figures published by his own Bureau of Statistics that he uses a raft of surveys and privately published economic numbers to glean information on the state of China’s economy. One such number is published during the early hours of Wednesday morning – holders of the Chinese Yuan (currency:CNY) will be hoping for an improvement on June’s showing of CYN1,380 bn from the July edition of the New Yan Loans data to idicate that China’s economy is beginning to fire again.

Will the Australian and New Zealand Dollar Exchange Rates Gain?



Such a result will favour the export-driven New Zealand Dollar (currency : NZD) and the Australian Dollar currency : AUD), both of which continue to depend on shipments of goods to Asia’s number one economy. You don’t have to go back many years to get back to a time when domestic inflation, and in particular sharply rising food prices, was a key concern for China’s policymakers. A generalised cooling of the nation’s economy during the intervening period has seen the pace of domestic inflation recede, affording the People’s Bank of China (PBoC) the opportunity to loosen its monetary policy.

If tomorrow morning’s Chinese Consumer Price Index inflation data for July shows that the rate of Chinese price increases has remained at well below the 2.0% threshold, raising the hope of further near-term monetary easing from the PBoC, then both the Kiwi and Aussie Dollars could also enjoy increased support in the global currency markets.

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