Chinese GDP and a surprise RBA Minute sink AUD


China’s GDP grew 6.8% y/y in Q1 following the identical 6.8% y/y rise in Q4. The increase in Q1 matched projections and tracks steady, firm growth for China’s economy despite ongoing uncertainties over the trade outlook. GDP was up 1.4% in Q1 (q/q, sa) after the 1.6% gain in Q4. Meanwhile, the separate retail sales report showed a 9.8% y/y gain on a year to date basis from 9.7% in February. Industrial production grew at a 6.8% annual pace year to date from 7.2% in February. The RBA minutes were a mixed bag but the Bank included more warnings on weak expectations of inflation and criticality of Chines economy to Australian local growth. Household debt is also to be watched closely and that an appreciation in the AUD would slow expected acceleration in economy. The key phrase was an inclusion that, although  there was not a strong case for a near-term move in policy “given current circumstances” the board agreed next move in rates likely to be up. So a change in “current circumstances” and this long held assumption slips, hence the fall in AUDUSD to support at 0.7760 and GBPAUD to test 21 month highs around 1.8500.


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