Commodity Currencies Falling Despite Better Chinese Economic Data

Citi improved its projection for China’s GDP growth for this year to 5.3% from 5.0% earlier. Earlier today, Nomura, JP Morgan, and ANZ moved their GDP growth predictions for the Chinese economy for 2023 up somewhat. This comes after today’s positive economic data from China.

Early this morning the Industrial Production, GDP, and Retail Sales which are listed below all came above expectations. Now we are getting some real signs that the Chinese economy is turning tail and showing some real improvement.

This should have helped risk assets such as commodity dollars, but the sentiment has turned negative on geopolitical tensions and the sentiment and risk assets are falling while safe havens such as Gold and the CHF are climbing. AUD/USD has reversed lower after having failed at moving averages a while ago.

Chinese GDP, Retail Sales and Industrial Production

• Q2 GDP +1.3% vs 1.0% expected
• Q3 GDP QoQ was 0.8%
• GDP YoY 4.9% vs 4.4% expected
• GDP YoY in Q2 was 6.3%
• September industrial production 4.5% vs 4.3% expected
• August industrial production was 4.5%
• September 5.5% vs 4.9% expected
• August retail sales were 4.6%

As the figures above indicate, China’s Q3 economic growth was higher than projected, raising confidence that the world’s second-largest economy could achieve, if not surpass, Beijing’s 5% objective this year. Recent figures indicate that economic activity is stabilizing. On Wednesday, September retail sales and industrial output figures outperformed median projections, but total fixed asset investment was slightly lower than expected for the first nine months of the year.

AUD/USD was bullish in the last two days despite the appreciation in the US treasury yields, so it seemed like the correlation between the US and bond yields was falling out. But, today the USD is starting to make some decent gains again in the US session as US bond yields resume the move higher. This pair found resistance at moving averages and has now reversed lower. We already booked profit on NZD/USD shorts.

AUD/USD Live Chart