• Chinese retail sales growth likely to have decelerated in September

    Source: FxWire Pro - Commentary / 15 Oct 2018 08:28:15   America/New_York

    The Chinese economic growth data for the third quarter is set to be released this week. According to a DBS Bank research report, the GDP growth is likely to have decelerated to 6.4 percent. Domestic demand is expected to have continued to slowdown.

    Meanwhile, growth in retail sales is likely to have slowed from August’s 9 percent to 8.6 percent year-on-year in October. Similarly, industrial production might have eased to 5.8 percent from 6.1 percent. This greatly mirrors the contraction in new export order component of the official manufacturing PMI, due to increasing trade frictions.

    Fixed asset investment is expected to have recovered a bit to 5.5 percent in September, owing to the RRR cut in July.

    “Looking ahead, the 100 bps cut of RRR announced last week will release further liquidity to buttress growth. The PBOC will also likely offer more longer-term cash via MLF to cope with the deterioration of corporate and local government cash flow”, stated DBS Bank.

    These will in turn increase the monetary supply. Yet, the authority has spared no effort in the controlling the financial risk by shifting the shadow banking product bank onto the book.

    “On inflation, the rising food price should continue to add upward pressure to CPI. Yet, PPI will moderate due to external uncertainties and high base effect”, added DBS Bank.

    At 12:00 GMT the FxWirePro's Hourly Strength Index of Chinese Yuan was slightly bullish at 66.8416, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at -42.8113. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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