Sentiment improves as China data boosts hopes of 5% growth

China’s banks lent a record ¥4.9 trillion in January as the economy reopened form lockdowns. And there was some anticipation to see whether the new loans were making their way through the economy to aid the governments GDP target of ‘around’ 5% this year. Early data suggests they are.

Retail rose to 3.5% as expected, up from -1.8% previously
Fixed asset investment rose 5.5%, above 4.4% expected and 5.1% prior
Industrial output rose 2.4% y/y (whilst this was below estimates of 2.6% y/y, is a big improvement from 1.4% in January).

During the accompanying press conference, the NBS (National Bureau of Statistics) cited seasonality for the slight rise in the unemployment rate to 5.5%, but more importantly, China’s growth target of around 5% is in line with economic data although the economy does face many challenges.

Whilst these may not be knockout numbers, they’re certainly an improvement and will contribute to Q1 GDP figures. And against the backdrop of the bad start to the week we had regarding the fallout from SVB, a little good news can make a big difference to help sentiment. The data saw Asian equities and US futures point higher, along with AUD, EUR and GBP which are currently the strongest majors.

AUD/JPY 1-hour chart:

A bullish trend is developing on the 1-hour chart. Strong volumes accompanied yesterday’s rally to the high, and prices are continuing to drift higher today in Asia whilst respecting trend support. Prices are also above the 20 and 50-bar EMA’s around 89.50, a level which the bias remains above. Bulls will need to break prices above the round number of 90, and a resistance zone also sits nearby between 90.20/30 – but if we can get above here, it opens up a run for the highs around 91.

Cleary, we need appetite for risk to pick up today for risk pairs such as AUD/JPY to benefit, and the idea scenario would be higher yields, equities and commodity FX. But if sentient turns sour, a clear break beneath 89.50 would pique our bearish interest.

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Please ensure you fully understand the risks involved by reading our full risk warning.

FOREX.com is a trading name of StoneX Europe Limited, and FOREX.com/ie is a domain operated by StoneX Europe Ltd, a member of StoneX Group Inc. StoneX Europe Ltd, is a Cyprus Investment Firm (CIF) company registered to the Department of Registrar of Companies and Official Receiver with a Registration Number HE409708, and authorized and regulated by the Cyprus Securities & Exchange Commission (CySEC) under license number 400/21. StoneX Europe is a Member of the Investor Compensation Fund (ICF) and has its registered address at Nikokreontos 2, 5th Floor, 1066 Nicosia, Cyprus.

StoneX Europe Limited is registered with the German Federal Financial Supervisory Authority (BaFin). BaFin registration ID: 10160255

FOREX.com is a trademark of StoneX Europe Ltd, a member of StoneX Group Inc.

The statistical data and the awards received refer to the Global FOREX.com brand.

This website uses cookies to provide you with the very best experience and to know you better. By visiting our website with your browser set to allow cookies, you consent to our use of cookies as described in our Privacy Policy.

Through passporting, StoneX Europe is allowed to provide its services and products on a cross-border basis to the following European Economic Area ("EEA") states: Austria, Bulgaria, Croatia, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden.

Additionally, StoneX Europe Ltd is allowed to provide Investment and Ancillary Services to the following non-EU jurisdiction: Switzerland.

StoneX Europe Ltd products, services and information are not intended for residents other than the ones stated above.

Tied Agent Information: KQ Markets Europe Ltd with Company No. HE427857.
Address: Athalassas 62, Mezzanine, Strovolos, Nicosia Cyprus.
Services Provided: Reception and Transmission of Orders.
Commencement Date: 06/12/2022
Website: KQ Markets - CFD Trading | KQ Markets

We may pay inducements, such as commissions or fees, to affiliates or third-party introducers for referring clients to us. This is in line with regulatory guidelines and fully disclosed where applicable.

StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation. StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.