According to official figures out this morning the Chinese economy grew by its slowest pace since 1999. As Australia’s biggest trading partner this news is clearly negative for the already under pressure Australian Dollar. Chinese GDP is at 7.7% and although higher than their government target of 7.5% this is worrying.
Chinese growth has been fueled by a government led investment into the economy and recently the model has changed more to domestic consumption as China tries to rely on itself rather than other countries for its growth.
With demand for Australian natural resources having slowed during 2013 this is one of the major reasons for the problems in Australia currently being reflected in the weakening of the Australian Dollar.
As a general rule the Christmas period tends to inflate economic data particularly retail sales and unemployment which can increase owing to more consumer demand. However, last Thursday’s unemployment data was lower than expected which caused the Australian Dollar to weaken.
Also, towards the end of last week Sterling pushed through further highs following Retail Sales figures which were the best since 2004.
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