Major currencies saw a muted response to Chinese GDP data out today that showed growth slowing to the lowest since the first quarter of 2009. China’s GDP expanded by an annual rate of 6.7% in the first three months of the year, in line with estimates but a slowdown from the previous quarter’s 6.8% rate.
The growth figures ease concerns about a hard landing in China and other data out today added to the optimism for China’s economy. Industrial production in March grew at an annual rate of 6.8%, beating estimates of a 5.9% increase. Fixed asset investment, an important gauge of business spending in China, accelerated to 10.7% in March in the year to date, which was above expectations of 10.3%. Retail sales were also robust, increasing from 10.2% to 10.5% year-on-year in March versus expectations of 10.4%.
The Chinese yuan was only slightly weaker on Friday despite a lower midpoint set by the country’s central bank as it was boosted by the positive data. The onshore yuan was last trading at 6.4824 to the dollar.
Also benefiting from the upbeat economic numbers was the Australian dollar, which is used as a liquid proxy for China’s economy. The Aussie climbed to an intra-day high of 0.7734 versus the US dollar after the data but fell back to around the 0.77 level in late Asian trading.
The New Zealand dollar meanwhile rebounded sharply from yesterday’s lows when it fell following a surprise easing of policy by Singapore’s central bank. Steady commodity prices provided some support to the kiwi on Friday as it recovered to 0.6891 versus the greenback.
The Japanese yen came under pressure today from remarks by the Bank of Japan’s governor who used his strongest language yet to describe the yen’s recent gains. Governor Kuroda called the yen’s appreciation as “excessive”, although he added that the rise has been corrected somewhat in the past few days.
The US dollar climbed to a one week high of 109.72 yen earlier in Asian session, before slipping to 109.35 yen following an upward revision to Japanese industrial output in February. The greenback only saw a brief fall yesterday from weaker-than-expected US inflation figures and has been broadly steady against a basket of currencies, while holding onto its recent gains.
The euro was stuck near 2½-week lows below 1.13 dollars and was last trading around 1.1250 dollars. The pound was also muted on Friday, though it managed to recover from yesterday’s low of 1.4090 to stand at 1.4142 in late Asian session today.
Oil prices held steady ahead of this weekend’s talks in Doha between OPEC and non-OPEC producers to discuss a deal to limit supply. Although no cut in production is expected, it is hoped that an agreement will be reached to freeze output. Brent crude was last trading at $43.89 a barrel, while WTI futures were at $41.54 a barrel.
Coming up later today, there is no major data out of Europe but US data should keep traders busy later in the US session. The University of Michigan preliminary confidence data for April is due along with US industrial production numbers for March, as well as the latest US oil rig count. A speech by the Fed’s Evans may also attract some attention.