China: A bumpy recovery in the making

Allan von Mehren Danske Bank A/S

Chinese policy makers have drawn a line in the sand and now push stronger for an end to the housing crisis. We expect the stimulus push to continue in 2025 to achieve this.

However, a new US-China trade war is looming expected to cause a new bump in the road. We have revised down growth to 4.7% from 5.2% in 2025.

We expect the CNY to weaken further against the USD, which will dampen some of the impact from higher tariffs.

In 2026 we look for growth at 4.8% but with a healthier composition with the consumer engine moving up a notch and the drag from housing easing further.

The US-China rivalry is set to intensify with Trump’s foreign policy taking stronger aim at China. He is unlikely to cross China’s red line on Taiwan, though.

EU-China trade tensions are likely to continue but we don’t expect it to escalate into a big trade war.

Download The Full Research China

Author

Allan von Mehren

Danske Bank A/S

AUD/USD edges higher as hot CPI inflation and hawkish RBA lift rate hike bets

The AUD/USD pair gathers strength to near 0.7035 during the Asian trading hours on Friday. The Australian Dollar edges higher against the US Dollar as hotter Australian CPI inflation data has bolstered expectations of Reserve Bank of Australia rate hikes.

USD/JPY meets support near 157.00

USD/JPY retreats for the third consecutive day on Friday, revisiting the 157.00 region before attempting some recovery as investors continue to assess the latest BoJ meeting, where the central bank left rates unchanged, as widely anticipated.

Gold sinks to fresh yearly lows despite risk-off mood as Fed rate hike bets weigh

Gold slips to fresh year-to-date lows on Friday. The metal struggles despite a risk-off mood across markets, as expectations of further Federal Reserve (Fed) interest rate hikes continue to dominate price action, leaving Gold on track to end the month in negative territory.

Ripple Price Forecast: XRP bulls defend $1.20 as sell-side pressure triggers liquidations

Ripple (XRP) trades around $1.25 on Friday, rising from a short-term support level established at $1.20. This minor upward correction follows a sharp sell-off, triggered amid reports of a hack attack on the Binance exchange that impacted approximately $6.3 billion. The attack drove the broader crypto market on edge, as Binance suspended both deposits and withdrawals to contain the situation.

BoJ recap: A pause for now... but Japan has entered a new inflation phase

The Bank of Japan left its short-term policy rate unchanged at 1.25% but delivered a distinctly hawkish message on the risk of an inflation overshoot. The decision passed by 8-1, with board member Takata dissenting in favour of an increase to 1.5%, while Governor Kazuo Ueda stressed that the Bank would continue adjusting policy as needed.

The 2% inflation target came from a throwaway remark. It now moves trillions

The Federal Reserve's 2% inflation goal grew out of an off-the-cuff remark by a New Zealand politician in 1988. Bond investors still price long-term US debt as if 2% holds, so a change in how the Fed measures inflation would move markets.