WorldWideMarkets Community

Forex Trading, Market News & Technical Analysis

Chinese Economic Growth is not the Only Factor

Posted by WorldWideMarkets . on Jul 24, 2013 3:23:00 AM

Premier Li Keqiang was cited as saying the line in the sand for Chinese growth was nothing below 7 percent. There are a lot of currencies relying on that line being held in the near term. The aussie in particular but also the kiwi, the loonie and even the South African rand. In short, anything closely related to a commodity-bloc currency. But ignoring the usual concerns about the reliability of Chinese data it is likely that target will be held. China needs social stability to achieve its economic goals so while they may tinker with the economy, they do not want to derail it. Some talk that the Middle Kingdom will increase investment in transport infrastructure projects, fittingly railways, to absorb spare capacity.

 Other nations that have benefitted from China’s accelerating economy are hoping that will happen. But China’s focus is not on supporting other nations. China, like every other nation, is self interested. So while the ongoing Chinese growth story is very important, it is not the only fact that an investor has to look at. The aussie is stumbling because of its own particular fundamentals, as is the rand. New Zealand is definitely a case in point. New Zealand will be impacted by not only slowing growth in China but also slowing growth in Australia. Yet, heading into the RBNZ monetary policy meeting on Thursday the expectation is that reconstruction after the recent earthquake has provided solid underlying economic support allowing the RBNZ to leave the benchmark rate unchanged. Indeed, though it will remain a key focus, it’s conceivable that China’s economic growth may become of less importance going forward for an FX investor until the yuan becomes freely comfortable. That would not necessarily be a bad thing while China sorts out a few issues. China relying on break neck growth and the rest of the world relying on China was always putting too many eggs in one basket. Asian trading


Tools & Educational Resources

Forex 101LEARN MORE >>
Learn the basics of Forex and how to practice trading the markets.

GlossaryLEARN MORE >>
Confused by the language? Click here and search for key trading terms.

Browse our frequently asked questions and find your answers right away.

Access to the educational lessons, webinars and platform walkthroughs.


Get started with a FREE $10,000 Demo Account and experience the Forex Market RISK FREE!