Global markets unsettled post China Q3 GDP release

Global Market

A sense of unease rattles the financial markets following the mixed response from the China GDP Q3 release of 6.9%. Market participants remain divided as even though the figure beat the 6.8% estimates, this was still the slowest pace of growth seen since the first quarter of 2009. A China industrial production y/y of 5.7% which also failed to meet expectations mounted additional pressures on the already dented sentiment investors had towards the China markets. This has resulted in most Asian equities meandering back into the red territory at the end of Monday’s trading session.

It feels that with five interest cuts and several rounds of reduction to the reserve level since November, the China government has failed to reset growth, with this latest Q3 GDP figure acting as validation to this argument. The string of previous soft economic releases from China in October combined with the unimpressive figures from Monday, offer a compelling argument as to why the PBoC may cut benchmark interest rates for the 6th time in an attempt to revive economic growth with the mission of hitting the 7% end of year target.

Following the GDP release from China, European equities had a mixed reaction with the FTSE100 noticeably declining back to the intraday support of 6360. Whilst the FTSE100 remains technical bullish on the daily timeframe, increasing concerns about the slowdown in China which resulted in a selloff in mining stocks will bite back at the FTSE100 in the near future. Technically a move below 6250 suggests the start of a heavy decline within the FTSE100, but an intraday break below the 6360 may act as an early signal for the pending fall. The mixed reaction to China’s news illustrated in today’s Asian and European equities markets may likely ripple into the American equity arena in the US trading session.

With the looming FOMC statement for October drawing near, every speech by an FOMC member holds a high level of relevance. Today FOMC Member Brainard will be speaking in the US session; market participants may be paying close attention to additional clues on the already faded expectations of a US rate hike in 2015.

USDCHF

The USDCHF is technically bearish on the daily timeframe. Prices are trading below the daily 20 SMA and the MACD has crossed to the downside. As long as prices can keep below the 0.9650 resistance, there may be a decline to the next relevant support at 0.9480.

USDCAD

The USDCAD is technically bearish on the daily timeframe. Prices are trading below the daily 20 SMA and the MACD has crossed to the downside. A solid breach below the 1.2900 support may open a path to the next relevant support at 1.27500.

EURAUD

The EURAUD remains bearish on the daily timeframe as long as prices can keep below the 1.5800 resistance. Prices are trading below the daily 20 SMA and the next relevant support may be based at 1.5250.