Risk Currencies Feeling Better Again as IMF Feels Better About China

Posted Wednesday, April 10, 2019 by
Skerdian Meta • 1 min read

My colleagues posted earlier on that the International Monetary Fund (IMF) has revised the growth outlook for this year for China higher, from 6.2% previously to 6.3%. It’s not a major revision but it confirms that the slowdown in the Chinese economy is over, or at least it will be over soon. US and China will likely strike a trade deal soon, so things are starting to look promising.
Risk assets such as stock markets are loving this as they turned bullish last week after the reversal higher in Chinese manufacturing and services sectors. Yesterday stock markets retraced lower after Trump’s comments on tariffs on European goods, which hurt the sentiment somewhat.

Today’s report from the IMF is giving stocks another reason to rally and they are reversing higher from yesterday’s lows. Risk currencies are also loving this, especially commodity Dollars. NZD/USD has jumped around 15 pips higher while AUD/USD is 40 pips highs from last night’s lows. AUD/USD is flirting with the 100 SMA (green) on the daily chart now which has been providing resistance for two months.

Whether it will break the 100 SMA remains to be seen, but this is positive for risk currencies, which we have to keep in mind. If the Chinese economy continues to improve as we saw in last week’s reports, then commodity Dollars will turn bullish in the long term. It’s a bit soon for this, but we must read things in advance if we want to make it in this business and the signs point to a bullish reversal soon.

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