U.S. Rise On Faster GDP Growth While China’s Decline Appears Imminent

The dollar climbed for its sixth day in a row on accelerated US GDP growth. The annualized growth rate in Q2 was 4.6%, speeding up from 4.2% in Q1, boosting the speculation of an early rate hike from the Fed. The bullish momentum of the dollar remains and the EUR/USD fell to a fresh 22-month low – nearing November, 2012’s low of 1.2660.


On the other side, additional soft data from the Chinese economy has led way for more market concerns on the slowdown of the world’s second largest economy. Chinese steel consumption which contracted for the first time since 2000 has worsened worries. China, the largest steel manufacturing and consuming country are changing its former developing model form massive investment on infrastructure and real estate to encouraging more domestic consumption. The change will mean that steel demands may not expand at a same rate as the economy once did.

Under this background and with no sign of new stimulus policy from Beijing, the bearishness of iron ore and other commodities may continue in the short and middle run. As a result, the AUD has also suffered from this situation as Australia’s largest trading partner is losing their appetite for Australian mineral resources. The fall of the Aussie dollar continued last Friday and was only one step away from the year low of 0.8660.


Asian stocks performed weakly on Friday. The Shanghai Composite moved slightly up to 2330. The Nikkei Stock Average fell by 0.88%. The Australia 200 slumped 1.28% to 5313. In European stock markets, the UK FTSE was up 0.15%, the German DAX lost 0.20% and the French CAC Index rebounded by 0.91%. U.S. stocks were boosted by faster GDP growth. The S&P 500 rose 0.86% to 1983 and climbed above its 50-day MA of 0.9%. The Dow edged up 0.99% to 17113, while the NASDAQ CompositeIndex surged 1.02% to 4512.

It’s a light data release today. The UK Net private Lending will be released at 18:30 AEST. The US Core PCE Price Index and Personal Spending will be released at 22:30.

Have a great trading day!
Anthony