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Major currencies and the Asian bourses stayed in Chopsville for most of the session, except for the New Zealand dollar which tanked after China printed top-tier reports.

  • AU NAB business confidence remains at 8 in October
  • China’s industrial production (y/y) up by 6.2% vs. 6.3% expected, 6.6% previous
  • China’s fixed asset investment (ytd/y) up by 7.3% as expected vs. 7.5% previous
  • China’s retail sales (y/y) up by 10.0% vs. 10.5% expected, 10.3% previous
  • China’s foreign direct investment (ytd/y) up by 1.9% vs. 1.6% in September

Major Events/Reports:

China’s data dump

The world’s second largest economy printed a bunch of top-tier data earlier today. Unfortunately, there were more misses than hits.

China’s industrial production clocked in a 6.2% growth from a year earlier in October, which is juuust below the expected 6.3% uptick and September’s 6.6% growth.

Manufacturing output slowed down to 6.7% from 8.1% in September while mining production declined by another 1.3% after slipping by 3.8% in the previous month. Output of electricity, gas, and water production went up by 9.2% after rising by 7.8% in September, though.

Retail sales also missed with only a 10.0% growth – the weakest since February – in October. Analysts were expecting a 10.5% uptick from September’s 10.3% growth. Sales grew at a slower pace for most categories with only cosmetics and office supplies recording faster purchases.

Last but not the least is fixed asset investment, which is up by 7.3% in the first ten months of the year against its 7.5% growth from January to September. What’s more, it marked its lowest growth since January to December mark in 1999!

The numbers underline investors’ concerns that the government’s crackdown on credit and pollution risks, as well as the Communist Party’s focus on the quality of economic growth, are taking their toll on growth targets.

Not many are buying the “sky is falling” story though. Some point out that today’s numbers may look weak, but only because September’s releases are solid. They believe that China’s economy is still on track to finish the year strong.

Australia’s business confidence hits all-time highs

National Australia Bank’s (NAB) business survey saw business conditions hitting new all-time highs in October.

The index clocked in a +21 reading for the month, which reflects “surprise improvement in manufacturing conditions” as well as “sharp” improvements in personal services conditions. Meanwhile, business confidence remained at +8, which is still “marginally” above the long-run average.

NAB pointed out that the employment index is at levels which are “sufficient to put more downward pressure on the unemployment rate,” though it cautioned that other leading indicators point to “possibility of some pull-back in coming months.”

Major Market Mover(s):

NZD

The New Zealand dollar started its descent as soon as AUD/NZD reacted to Australia’s business survey release, but it wasn’t until China’s data dump was published when the bears REALLY came out to play.

NZD/USD is down by 31 pips (-0.45%) to .6870;
NZD/JPY is down by 37 pips (-0.47%) to 78.05;
GBP/NZD is up by 83 pips (+0.44%) to 1.9090, and
AUD/NZD is up by 62 pips (+0.56%) to 1.1106.

AUD

Aussie bears shrugged off China’s weak data releases in favor of pricing in a strong business survey report from the Land Down Under.

AUD/USD is up by 6 pips (+0.08%) to .7629;
AUD/JPY is up by 7 pips (+0.08%) to 86.69;
GBP/AUD is down by 15 pips (-0.09%) to 1.7189, and
EUR/AUD is down by 6 pips (-0.04%) to 1.5298.

  • 7:00 am GMT: Germany’s preliminary GDP (q/q) to remain at 0.6%?
  • 7:00 am GMT: Germany’s final CPI expected to keep its 0.0% rate
  • 8:15 am GMT: Switzerland’s PPI (0.2% expected, 0.5% previous)
  • 9:00 am GMT: Italy’s preliminary GDP (q/q) (0.5% expected, 0.3% previous)
  • 9:30 am GMT: U.K.’s GDP report (y/y) (3.1% expected, 3.0% previous)
  • 9:30 am GMT: U.K.’s PPI input (0.8% expected, 0.4% previous)
  • 9:30 am GMT: U.K.’s PPI output (0.3% expected, 0.2% previous)
  • 9:30 am GMT: U.K.’s core CPI (y/y) (2.8% expected, 2.7% previous)
  • 9:30 am GMT: U.K.’s house price index (y/y) (5.1% expected, 5.0% previous)