SYS-CON MEDIA Authors: Xenia von Wedel, Peter Silva, Glenn Rossman, Ava Smith, Elizabeth White

News Feed Item

FXPRIMUS Market Brief of the Week: China 4Q Gross Domestic Product (GDP) Meets Expectations, but Growth Slows Down

SINGAPORE, SINGAPORE -- (Marketwired) -- 01/20/14 -- In FXPRIMUS' Market Brief of The Week for 20 January, the brokerage firm's Senior Economist, Jimmy Zhu, China's key data releases and how they are affecting worldwide markets.

Economic Insights

Slightly Lower Chinese GDP in 4Q Suggests That Growth Has Peaked in Near Term

This morning, China just released key data such as its 4Q GDP and December Industrial Production (IP) data. China's 4th Quarter GDP rose 7.7% YoY, 1.8% QoQ; December Industrial Output rose 9.7% YoY; December Retail Sales rose 13.6% YoY; economic growth slowed down slightly, as factory output and investment spending eased in the fourth quarter. It signalled that credit growth might take a hit this year due to the government's determination to curb shadow banking.

China has not released its 2014 growth target yet, and it is likely to be released next month based on past history. We estimate that the GDP target for this year will remain at 7.5%. In other words, the government could be using a gradual pace to reform the economy.

Markets took the releases negatively, as the recent indicators suggested that economy has been fading since middle of the 4Q. It is one of the reasons why the Aussie moved toward the level of 0.85. The employment data adds on further bets that the Reserve Bank of Australia (RBA) could lower its cash rate again during the first half of this year. Last week, Australian payrolls fell by 22,600 in December when consensus was a decent gain. Full-time payrolls recorded a big loss since 1992. The unemployment rate remains high at 5.8%, matching the highest level since June 2009.

Aussie failed to rebound although policy decisions on 5th November and 3rd December last year by the RBA was to "hold the rates", and Glenn Stevens said the exchange rate was "uncomfortably high", which was not so dovish compared to the middle of last year.

However, he jawboned the Aussie dollar lower as he thought the AUDUSD should be close to 0.85.

According to current consensus, here are the top four concerns on reasons that may push the Aussie dollar lower in 2014:

Growth engine in China was lost, especially the demand for the hard commodity from China. It should not be recognized as a positive catalyst for the Aussie dollar.

According to the swap market, there is a 48.6% chance that the RBA benchmark cash target will be lowered by June 2014. So long as easing expectations exist, the Aussie will remain under pressure even if there is no "rate cut" from the RBA.

The Australian economy will probably grow by 2.7% this year, with the expansion accelerating to 3% in 2015. The growth is well below the historical average growth in Australia, prompting the central bank to do more in the coming months.

The U.S. recovery should gradually remove the Federal Reserve (Fed) stimulus, bidding for a stronger USD.

Top news this week

New Zealand: Consumer Price Index (CPI) Q/Q.

I expect figures to come in at 0.3% (previous figure was 0.9%).

HSBC flash China manufacturing Purchasing Managers' Indexes (PMI)

I expect figures to come in at 50.2.

German flash China manufacturing PMI

I expect figures to come in at 54.6.

Trade Recommendation

Long NZDUSD at 0.8220

On the H1 chart, NZDUSD is moving into its key support level at 0.8220. Momentum for the Aussie is still to the downside, hence the crowded AUDNZD shorts could offer some support to the Kiwi's upside. Chinese reform to increase the personal wages also benefits the New Zealand's Dairy exports activities. Additionally, monetary policy for New Zealand is supportive of a stronger Kiwi as the central bank might raise the rates in 1H this year.

We will go long once prices retrace further to our support level at 0.8220. A stop loss of 50 pips is placed. We will have two targets on this trade, exiting the first position at 0.8270 and the second one at 0.8320.


Entry Price = 0.8220
Stop Loss = 0.8170
1st Profit = 0.8270
2nd Profit = 0.8320

NZDUSD H1 Chart: http://media3.marketwire.com/docs/fxpnzusd0120.jpg.

Source: Bloomberg

ABOUT FXPRIMUS

FXPRIMUS offers retail traders a level of trade execution, service quality and fund safety that are normally reserved only for the largest investors. Serving traders in 205 countries across 6 continents, FXPRIMUS combines an unmatched level of fund safety with regular independent audits of company financials and Straight Through Processing, top notch execution with tight spreads, prompt and responsive customer support, ISO 27001 certification in Information Security, ISO 9001:2008 certification in Quality Management and an industry-leading trader toolset that includes free access to powerful trader tools. FXPRIMUS truly is The Safest Place To Trade.

Add to Digg Bookmark with del.icio.us Add to Newsvine

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
Connected devices and the Internet of Things are getting significant momentum in 2014. In his session at Internet of @ThingsExpo, Jim Hunter, Chief Scientist & Technology Evangelist at Greenwave Systems, examined three key elements that together will drive mass adoption of the IoT before the end of 2015. The first element is the recent advent of robust open source protocols (like AllJoyn and WebRTC) that facilitate M2M communication. The second is broad availability of flexible, cost-effective ...
The Internet of Things will put IT to its ultimate test by creating infinite new opportunities to digitize products and services, generate and analyze new data to improve customer satisfaction, and discover new ways to gain a competitive advantage across nearly every industry. In order to help corporate business units to capitalize on the rapidly evolving IoT opportunities, IT must stand up to a new set of challenges. In his session at @ThingsExpo, Jeff Kaplan, Managing Director of THINKstrateg...
We are reaching the end of the beginning with WebRTC, and real systems using this technology have begun to appear. One challenge that faces every WebRTC deployment (in some form or another) is identity management. For example, if you have an existing service – possibly built on a variety of different PaaS/SaaS offerings – and you want to add real-time communications you are faced with a challenge relating to user management, authentication, authorization, and validation. Service providers will w...
How do APIs and IoT relate? The answer is not as simple as merely adding an API on top of a dumb device, but rather about understanding the architectural patterns for implementing an IoT fabric. There are typically two or three trends: Exposing the device to a management framework Exposing that management framework to a business centric logic Exposing that business layer and data to end users. This last trend is the IoT stack, which involves a new shift in the separation of what stuff happe...
Cultural, regulatory, environmental, political and economic (CREPE) conditions over the past decade are creating cross-industry solution spaces that require processes and technologies from both the Internet of Things (IoT), and Data Management and Analytics (DMA). These solution spaces are evolving into Sensor Analytics Ecosystems (SAE) that represent significant new opportunities for organizations of all types. Public Utilities throughout the world, providing electricity, natural gas and water,...
"Matrix is an ambitious open standard and implementation that's set up to break down the fragmentation problems that exist in IP messaging and VoIP communication," explained John Woolf, Technical Evangelist at Matrix, in this SYS-CON.tv interview at @ThingsExpo, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
Want to enable self-service provisioning of application environments in minutes that mirror production? Can you automatically provide rich data with code-level detail back to the developers when issues occur in production? In his session at DevOps Summit, David Tesar, Microsoft Technical Evangelist on Microsoft Azure and DevOps, will discuss how to accomplish this and more utilizing technologies such as Microsoft Azure, Visual Studio online, and Application Insights in this demo-heavy session.
When an enterprise builds a hybrid IaaS cloud connecting its data center to one or more public clouds, security is often a major topic along with the other challenges involved. Security is closely intertwined with the networking choices made for the hybrid cloud. Traditional networking approaches for building a hybrid cloud try to kludge together the enterprise infrastructure with the public cloud. Consequently this approach requires risky, deep "surgery" including changes to firewalls, subnets...
DevOps is all about agility. However, you don't want to be on a high-speed bus to nowhere. The right DevOps approach controls velocity with a tight feedback loop that not only consists of operational data but also incorporates business context. With a business context in the decision making, the right business priorities are incorporated, which results in a higher value creation. In his session at DevOps Summit, Todd Rader, Solutions Architect at AppDynamics, discussed key monitoring techniques...
The Internet of Things will greatly expand the opportunities for data collection and new business models driven off of that data. In her session at @ThingsExpo, Esmeralda Swartz, CMO of MetraTech, discussed how for this to be effective you not only need to have infrastructure and operational models capable of utilizing this new phenomenon, but increasingly service providers will need to convince a skeptical public to participate. Get ready to show them the money!
One of the biggest challenges when developing connected devices is identifying user value and delivering it through successful user experiences. In his session at Internet of @ThingsExpo, Mike Kuniavsky, Principal Scientist, Innovation Services at PARC, described an IoT-specific approach to user experience design that combines approaches from interaction design, industrial design and service design to create experiences that go beyond simple connected gadgets to create lasting, multi-device exp...
P2P RTC will impact the landscape of communications, shifting from traditional telephony style communications models to OTT (Over-The-Top) cloud assisted & PaaS (Platform as a Service) communication services. The P2P shift will impact many areas of our lives, from mobile communication, human interactive web services, RTC and telephony infrastructure, user federation, security and privacy implications, business costs, and scalability. In his session at @ThingsExpo, Robin Raymond, Chief Architect...
High-performing enterprise Software Quality Assurance (SQA) teams validate systems that are ready for use - getting most actively involved as components integrate and form complete systems. These teams catch and report on defects, making sure the customer gets the best software possible. SQA teams have leveraged automation and virtualization to execute more thorough testing in less time - bringing Dev and Ops together, ensuring production readiness. Does the emergence of DevOps mean the end of E...
Scott Jenson leads a project called The Physical Web within the Chrome team at Google. Project members are working to take the scalability and openness of the web and use it to talk to the exponentially exploding range of smart devices. Nearly every company today working on the IoT comes up with the same basic solution: use my server and you'll be fine. But if we really believe there will be trillions of these devices, that just can't scale. We need a system that is open a scalable and by using ...
The Internet of Things is tied together with a thin strand that is known as time. Coincidentally, at the core of nearly all data analytics is a timestamp. When working with time series data there are a few core principles that everyone should consider, especially across datasets where time is the common boundary. In his session at Internet of @ThingsExpo, Jim Scott, Director of Enterprise Strategy & Architecture at MapR Technologies, discussed single-value, geo-spatial, and log time series dat...