Weak Chinese data dominates the markets

Monday, November 09, 2015

Chinese exports declined by 6.9% y/y in October, versus analysts’ expectations of a 3.2% drop. Imports dropped sharply by 18.8% y/y in October (vs exp. of -15.2%) compared to a 20.4% strong decline in September. The fairly disappointing Chinese economic data weighed to some extent on market sentiment, while Asian equity markets were mixed overnight. The Hang Seng index retreated by 0.6% towards 22,700, while the Shanghai Composite index bucked the trend and edged higher towards 3,650 (+1.6%). Weaker demand for iron ore, coal and other commodities dragged imports down, leaving a record trade surplus of $61.6 billion. It seems that the Chinese Central Bank will maintain its stable monetary policy, as the PBOC reported that the economy faces downward pressure and inflation is likely to be low.

German exports increased by 2.6% m/m in September, beating analysts’ estimates of 2.0%, while imports increased by 3.6% during the same period. European equity markets gave back initial gains and slid lower in early trade this morning as the DAX, CAC, IBEX and Italian equity benchmark indices retreated between 0.25% and 0.50%. The euro rebounded following Friday’s selloff and climbed higher this morning towards 1.0800 against the US dollar.    

This week, the main focus will turn to the release of the comments from the US Federal Reserve, Bank of England and ECB. Despite the mixed global macroeconomic picture, it is likely that the Fed and the BoE could increase interest rates in order to stabilise monetary policy. However, the ECB seems to have the opposite direction by increasing stimulus in order to tackle tepid growth in the European economies. The USD index rallied on Friday following the release of strong US employment data and hit a high at 99.345 against a basket of currencies. This morning, the USD index slid slightly lower, hovering around 98.80.

USD index hovers around 99.0 against a basket of currencies

DXY Curncy (DOLLAR INDEX SPOT)   2015-11-09 08-45-54

Today, market participants will be keeping an eye on the Eurogroup meeting. It looks like economic conditions have slightly improved for the Greek economy as the situation looks somewhat more stabilised, however, the Greek government is about three weeks behind with agreeing on just a few measures regarding its debt deal discussion.    

EURUSD edges higher towards 1.0800 after Friday's sharp selloff 

EURUSD Curncy (EUR-USD X-RATE)   2015-11-09 08-48-49

 

Events for today:

0530

CN

Oct

Trade Balance (08/11/15)

0530

CN

Oct

Foreign Direct Investment (08/11/15)

0700

DE

Sep

Trade Balance

0930

DE

Sep

Sentix Investor Confidence

All times UK Local Time

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