Yesterday saw the release of Chinese output and retail data which showed that industrial output rose 8.6% in both January and February. Retail Sales were also shown to have increased 11.8% year on year. Although the figures sound rather high they were less than what was expected. A few events in China have suggested signs of a slowdown recently and with growth forecasts having been changed to 7.5% for this year and the Chinese Finance Minister rather blasé about whether it’s an issue if it’s not hit I think we’re going to see an uncertain future for the world’s second largest economy.
A slowdown for China could lead to a longer term weakening for the Australian Dollar as it is heavily reliant on the Chinese economy and their demand for Australia’s natural resources. China also this week announced a trade deficit of US$23bn for February, the largest in quite some time. There were falls for many Australian mining companies owing to the recent poor figures.
The referendum in Crimea is due to take place on Sunday and I think owing to the uncertainty and the political instability in the region this could lead to some volatility for exchange rates in the early part of next week.
Next week there is a huge amount of data to watch out for which could affect Australian Dollar exchange rates.
On Tuesday the RBA Meeting’s Minutes are out and this will be closely watched by investors to find out what will happen in the short term to Australian Dollar exchange rates. In February the RBA announced an end to their interest rate cutting cycle which is why we saw a fightback by the Aussie against Sterling which was trading towards the 1.90 levels.
On Wednesday the Bank of England minutes are due out and with Carney likely to talk shortly afterwards this could see a bout of Sterling strength. However, the Claimant Count rate for the UK is out at the same time so expect Wednesday to be rather interesting for exchange rates.
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