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Commodity-related currencies shrugged off China’s weaker-than-expected GDP report while equities picked up the risk-averse vibe from the U.S. session.

  • NZ visitor arrivals dips by 1.9% in September vs. 2.8% growth in August
  • NZ credit card spending (y/y) retains 7.8% growth in September
  • Japan’s national core CPI (y/y) up by 1.0% as expected vs. 0.9% in August
  • China’s GDP down to 6.5% in Q3 vs. 6.6% expected, 6.7% in Q2
  • China’s GDP down to 6.5% in Q3 vs. 6.6% expected, 6.7% in Q2
  • China’s fixed asset investment (ytd/y) improves from 5.3% to 5.4% in September
  • China’s retail sales (y/y) jumps by 9.2% vs. 9.0% expected and previous
  • China’s unemployment rate edges lower from 5.0% to 4.9% in September
  • U.S. asks WTO for a panel over China’s tariff-related request

Major Events/Reports:

China’s data dump

Earlier today the world’s second-largest economy printed a bunch of top-tier reports that mostly clocked in mixed results.

The GDP report got the most attention, as it showed the economy growing by 6.5% from a year earlier in Q3 2018 when analysts had expected a 6.6% uptick after Q2’s 6.7% increase. In fact, 6.5% marks the weakest growth in NINE YEARS!

The economy had grown by 1.6% on a quarterly basis, which is weaker than Q2’s 1.7% but is right around markets’ expectations.

The data miss was not good for investors who were seeing weaknesses in areas like factory activity and infrastructure investment as the government’s crackdown on business debt pushed up the companies’ borrowing costs.

Meanwhile, a slowdown in manufacturing output dragged on industrial production. The report only reflected a 5.8% gain after rising by 6.1% in August.

China’s fixed asset investment showed better results, printing a 5.4% increase from January to September after last month’s 5.3% reading. Public investment grew a bit faster during the period, while public investment maintained its growth.

Last but not the least is the retail sales report, which popped up by 9.2% from a year earlier in September. That’s the fastest growth since April, yo!

Turns out, sales of garments, personal care, home appliances, furniture, and building materials grew at a faster pace, while cosmetics, jewelry, office supplies, and oil and oil products increased at slower paces.

Chinese government steps in to prop up sentiment

China’s GDP miss might have had a more bearish impact if several government officials hadn’t made efforts to share their optimism and future plans on the economy.

For starters, China Banking and Insurance Regulatory Commission (CBIRC) announced that it would now allow publicly-raised funds from bank wealth management products to be invested in China’s stock market.

The move pointed to higher demand for China’s stocks, which is probably why the Chinese markets didn’t fall as sharply as they did earlier this week.

Meanwhile, People’s Bank of China (PBoC) Yi Gang said in an interview that China’s current stock market valuation is at relatively low levels relative to the economy’s fundamentals.

He also shared that the central bank will roll out targeted measures to encourage commercial bank lending and help corporate financing problems.

Last but not the least is the PBoC plotting its USD/CNY reference rate at 6.9530, which is 0.16% weaker than yesterday and marks the lowest level since January 4, 2017.

Mixed market reaction

China missing its GDP expectations (by a bit!) weren’t received well in the Asian bourses, which were already picking up on the risk-averse theme from the U.S. session.

There were no new bombshells to cause the risk aversion but worries over the Fed’s rate hikes and the impact of the ongoing U.S.-China trade war were enough to keep the bear party alive.

  • Nikkei is down by 1.00% to 22,432.2
  • A SX 200 is up by 0.78% to 5,915.9
  • Shanghai index is down by 0.02% to $2,485.985
  • Hang Seng is down by 0.34% to 25,366.8

Commodities fared a bit better, with gold taking advantage of a bit of dollar weakness while crude oil prices gained some points back from a bearish U.S. session trading.

  • Gold is up by 0.20% to $1,227.70 per troy ounce
  • Brent crude oil is up by 0.14% to $79.42 per barrel
  • U.S. WTI is up by 0.20% to $68.78 per barrel

Major Market Mover(s):

Comdolls

Commodity-related currencies shrugged off China’s (slight) GDP miss in favor of pricing in the government’s efforts at limiting the bearish impact of today’s releases.

AUD/USD is up by 12 pips (+0.17%) to .7111; AUD/JPY is u by 28 pips (+0.35%) to 79.92; AUD/CHF is up by 16 pips (+0.22%) to .7084; EUR/AUD is down by 14 pips (-0.09%) to 1.6117, and GBP/AUD is down by 22 pips (-0.12%) to 1.8312.

CAD/JPY is up by 29 pips (+0.34%) to 86.03; CAD/CHF is up by 16 pips (+0.21%) to .7625; USD/CAD is down by 21 pips (-0.16%) to 1.3064; GBP/CAD is down by 19 pips (-0.11%) to 1.7012, and EUR/CAD is down by 12 pips (-0.08%) to 1.4972.

NZD/USD is up by 21 pips (+0.33%) to .6564; NZD/JPY is up by 39 pips (+0.53%) to 73.77; NZD/CHF is up by 25 pips (+0.39%) to .6583; GBP/NZD is down by 54 pips (-0.27%) to 1.9840; EUR/NZD is down by 43 pips (-0.25%) to 1.7461, and AUD/NZD is down by 16 pips (-0.15%) to 1.0833.

JPY

The low-yielding yen took the most hits on a recovery of its higher-yielding counterparts.

USD/JPY is up by 21 pips (+0.19%) to 112.39; EUR/JPY is up by 33 pips (+0.26%) to 128.81; GBP/JPY is up by 35 pips (+0.24%) to 146.36, and CHF/JPY is up by 16 pips (+0.15%) to 112.82.

Watch Out For:

  • 6:30 am GMT: BOJ’s Kuroda to give a speech in Tokyo
  • 8:00 am GMT: Euro Zone’s current account (21.4B EUR expected, 21.3B EUR previous)
  • 8:00 am GMT: Euro Zone’s current account (21.4B EUR expected, 21.3B EUR previous)