China's GDP eyed - Westpac

By FXstreet.com | July 15, 2014 AAA

FXStreet (Bali) - Sean Callow, FX Strategist at Westpac, reviews the day ahead, emphasizing the Chinese GDP figures and BoC rate call.

Key Quotes

China’s data slew at 12pm Syd/10am local dominates the calendar. Most eyes will of course be on GDP but the intra-quarter momentum will be worth noting in the June data, especially industrial production, where consensus is 9.0% y/y versus 8.8% in May. The median GDP forecast is 7.4% y/y, the same pace as Q1, with the vast majority of forecasts clustered within 7.2-7.6%. Local press suggestions yesterday of “faster” growth than in Q1 hints that 7.5% is a decent risk, which would be enough to provide at least modest support for AUD, NZD and Asian FX. Big picture however, Westpac’s baseline view is that growth doesn’t accelerate markedly until Q4 14, one factor behind our view that AUD/USD ends this year nearer 0.90 than 0.95.

It is another important day for the many GBP bulls, as the UK releases June claimant count unemployment (f/c -27k) and the May unemployment rate, seen edging down to 6.5% from 6.6%.

In the US, another busy data day features Jun PPI, May capital flows (TIC data) and Jun industrial production, where consensus is 0.3% m/m versus May’s 0.6% gain. Fed Chair Yellen delivers the second leg of her semi-annual testimony to Congress, this time to the House Financial Services Committee. She is almost certain to submit identical text and move straight to the Q&A. If anything, she should face even more grumpy questions from this Republican-chaired committee.

The Bank of Canada is fully expected to keep the policy rate at 1% where it has been since 2010. Thoughts of a tweak in the policy bias to a mild tightening tilt have been doused by the poor June jobs data.

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