While China has in the past made no secret about their intention to tame inflation and engineer more sustainable levels of growth, fears the economy is succumbing to the downside pressure driven by persistent anxiety from the Euro area continues to take its toll. Economic data out of Japan this week has also emphasized weakening global demand showing a significant fall in the current account surplus, while machine orders dropped near 15 percent in May.
In another sign emerging economies are highly susceptible to the constant negativity resonating from Europe, both Brazil and South Korea cut interest rate yesterday in an effort to both preserve and boost growth. Poor U.S earnings also remained a key point of contention for investors, which overshadowed positive jobs data with weekly U.S jobless claims falling to 350,000 for the week ending July 7, ahead of expectations 372,000 new claims.
The day ahead will see the focus remain on China with GDP, Industrial production, Retail Sales and Fix asset investment data on the docket. Growth is expected to have moderated in the second quarter to 1.6 percent from a previous 1.8 percent to represent annual growth of 7.9 percent. Despite the poor expectations priced in ahead of today’s release, the Aussie dollar remains highly susceptible to further downside at these levels with a print to the lower side of expectations likely to set the scene for further losses.
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