The raft of Chinese data today delivered some optimism for investors, with Industrial Production and Retail Sales numbers for August both overshooting expectations. Industrial Production came in at 4.5% vs 3.9% expected vs 3.7% previously. While Retail Sales registered at 4.6%, well above the 3% figure expected and the 2.5% prior reading.
The economic gauges today in conjunction with the latest RRR cut have financial markets feeling better about things on the China front to round out the week. While the numbers today are pleasing from the perspective of risk-appetite, investors will probably want to see a trend of better data start to develop before being lured back into Chinese assets with any conviction.
Elsewhere, the US PPI data echoed the rise in the CPI prints, while Retail Sales (in the US) were also looking healthy. All of which should keep the Fed on its toes with respect to interest rate decisions in the months ahead.
Aussie dollar moves higher
The Aussie Dollar made a move higher on the better Chinese numbers today, with the AUDUSD rate pushing above 0.6450. While the USD index (DXY) moderately eased, albeit the level is still sitting above the 105 level. The combination of an easing in the USD and positive China data allowed the gold price to make some headway during the session. Gold moved a few dollars higher to the $1915 region, with some resistance awaiting at the $1920 level which will need to be overcome if the precious metal aspires for larger gains.
The Euro remains on the backfoot after the ECB hiked but also strongly hinted that they could be done with respect to tightening. The ECB will be relying on inflation moving in the direction of the target level, but as we have seen there are no guarantees that CPI will behave as expected. The Euro was last seen struggling around the 1.0640 level during Asian trading hours.
Oil is showing no signs of letting up with the WTI contract notching up gains above the $90 per barrel handle. The optimistic demand outlook from the IEA and the output constraints by OPEC+ are driving momentum to the upside. If the USD ever starts to cool down, then one starts to imagine that further gains could be in store for the oil market.
Overall, the mood was good among equity markets today. The positive Wall Street lead and the improved China data helped to put risk assets on a solid footing heading into the weekend.
Market commentary from Tim Waterer, chief market analyst at KCM Trade
