Australian Dollar Steady as China Industrial Profits Return To Growth

The Australian dollar can act as the foreign exchange markets favorite liquid China economy proxy given Australia’s close export links to the world’s second largest economy. It should end at 95 cents in 2013 before sliding to 88 cents throughout 2014. There are four major reasons why the Australian dollar has been falling, with many signs that the decline is not over. It has grown as optimism to at least an interim trade settlement between China and the United States that has risen sharply until December. He rose slightlyFridayon news that Chinese industry earnings tumbled back to growth in November, although the move was likely dampened by holiday trading conditions. A strong dollar really doesn’t bode well for the Asian markets, she added. it’s really good for the Asian markets not guessing, ” she added.

The lower level was opened to create a space that runs the full length. The current level of consumer inflation is so mild that the PBOC will be comfortable resuming the financial deleveraging process, Iris Pang, ING economist, wrote in a note before the data. it is so mild that the PBOC will be comfortable resuming the debt relief process in the financial sector, ” Iris Pang, economist ING wrote in a note before the data.

China’s factory price inflation held steady in July in a positive direction for industrial production and profits for the third quarter, although a government-led deleveraging drive result is expected to cool, and economic growth by year-end. Still, a robust Chinese economy is likely to become part of a supportive backdrop for the Australian currency. The world’s second largest economy has braced expectations for a slowdown and expanded at a solid pace in the first half, as a government-led infrastructure has kept building construction, although the broad consensus for growth is easy to cool like government agencies in the neighborhood coming too hard on financial risks. Inflation has been sluggish in major economies including the United States, Europe and Japan despite brightening growth. Weaker producer prices and higher financing costs also play a role in driving the pace of growth down, he said.

Producer prices remained largely flat until February, only a tenth increase, the weakest increase more than 18 months and perhaps a signal of broader stagnation over price pressure. Oil prices also rose on hopes of more demand. The prices of commodity futures including reinforcing steel began to rise again in June and have continued to surge until the beginning of August, highlighting concerns about scarce supplies under pollution controls and strong restocking demand.

With Japan on an extended hiatus, currency markets were calm ahead of the FOMC meeting and US jobs numbers. Apartment investment surge expected. While the labor market will have solid growth ahead, low wage growth is likely to continue for a while. By oil, petrochemical, and coal industries, earnings grew 30 percent to 40 percent, while the light, textile, pharmaceutical, and steel industries saw earnings grow 10 percent to 20 percent. The entire industrial sector on the right track continues to see improvements through steady earnings growth and lower debt ratios, ” NBS statistician He Ping wrote in a note. China’s manufacturing, however, has shown solid, albeit somewhat slower, growth in July. While it has shown solid activity, a possible slowdown in earnings growth would impact its ability to trim debt levels, which remains a concern for policy makers.

A general increase in global risk appetite, with US stocks at record highs, and the forecast that US credit costs cannot pass through 2020 also help the pro-cyclical Aussie thing. Yet employment growth has slowed in recent months. Growth in the food industry was driven by strong demand as well as a drop in prices for some raw materials, the statement added. Lower growth is also an obstacle for foreign investors who want to put their money where the growth is strong and sustainable. WANTED INITIATIVE Chinese firms return to profit growth in March fueled doubts about how much more stimulus Beijing can roll out, without risking a rapid build-up in debt and potential speculative bubbles.