The market waited with baited breath for August’s credit creation figures. It was a little nervous following a huge slump in July that spawned the idea that Beijing was sucking the economy dry to tackle huge levels of debt. This time around the data was more encouraging but still missed expectations.
Aggregate financing rose to 957.4bn in August from 273.1bn in July (expected 1,135bn), which is below recent levels but historically ok. This is the broadest measure of credit available for China, as it includes bank loans and less regulated products, so it’s a good gauge of overall credit in the economy. The concern is that a restricted credit market would further stress an already fragile Chinese economy.
AUDUSD continues to fall; 0.9000 looms
AUDUSD dropped to a new six-month low on the back the data as it continues its descent towards an important psychological support zone around 0.9000. The pair isn’t being helped by widespread USD strength as the market revaluates the expected path of US interest rates due to rapidly improving US economic data. Not even yesterday’s astonishing jobs report out of Australia could save the pair, although the fact that the report seems too good to be true may have something to do with it.
NZD is falling, but not as much as AUD
The NZD is starting to win back some ground against the aussie, albeit not much yet. A big thing likely saving the kiwi is the fact that it has fallen so far and so fast already, which is making investors nervous about overstretching the sell-off. The NZ economy was pegged to be the standout economy of 2014 after all. While the economy isn’t as robust as once expected, it’s still performing well in the face of falling commodity prices, thus we may continue to see a pull-back in AUDNZD.
Source: FOREX.com
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