china gdp stabilises risk 906542015

The Asian session was dominated by Chinese data releases and the fact that economic growth has slipped to a 24 year low – despite all of the releases beating the market expectations. Industrial production came in at 7.9% versus 7.4% as expected, as retail sales beat the consensus forecast by 0.2% to 11.9% year on year.

However, it was the GDP release that gave the dollar and risk in general a lift as the December data came out at 7.3% - slightly higher than the 7.2% market expectation. This leaves the Chinese government yearly target of around 7.5% intact.

The IMF reduced their growth forecasts for China to 6.8% for 2015 and 6.3% for 2016, joining a chorus of forecasters by downgrading the global growth outlook – despite insistence that a lower oil price is a positive growth story. The IMF downgraded the global picture by 0.3% for 2015 and 2016 to 3.5% and 3.7% respectively. Like the World Bank, the IMF now forecasts the US to exceed the world estimate this year with a reading of 3.6% for 2015.

Media reports from the UK and the US suggest that ECB QE in the form of sovereign purchases is now a certainty to be announced at Thursday’s ECB meeting, citing French President Francois Hollande as the source. This suggests that the market will now focus on the size of the program, with €500 billion widely expected as the minimum.

The data focus today will be the German ZEW survey this morning, as the New Zealand global dairy auction is scheduled this afternoon – ahead of the CPI data released overnight.

EUR/USD

Supports  1.1550-1.1500-1.1420   | Resistance  1.1650-1.1800-1.1980

USD/JPY

Supports  116.80-116.30-115.85   | Resistance  118.80-119.30-120.80

GBP/USD

Supports  1.5050-1.5000-1.4850 | Resistance  1.5180-1.5235-1.5310