China: Data confirms Q1 was weak but we see signs that this may be the bottom - Danske Bank

According to Allan von Mehren, Chief Analyst at Danske Bank, data released today confirmed that activity during the first quarter in China was weak but forward looking indicators still support the case for a growth bottom.

Key Quotes: 

“Overnight we received Chinese data for industrial production, retail sales and fixed asset investments. Industrial production fell to 5.3% y/y for January/February from 5.6% y/y in December. This is the lowest level since the financial crisis. However, details in the report showed decent growth in both electricity and cement, which have tended to be better gauges of the Chinese business cycle in recent years.”

“This was a very mixed bag of data, which shows that some sectors are weak while others recovering. We generally do not put too much weight on the overall industrial production data, as the series started to correlate poorly with other business cycle indicators from around 2014.

“Some of our favourite indicators for China are PMI manufacturing, metal price inflation and some of the subcomponents in the industrial production report like electricity and cement, which have a higher correlation with PMI and other business cycle signals. Judging from these, the Chinese economy started 2019 on a very weak note but is showing signs that the worst may soon be behind us.”

“The data confirms that Q1 was weak but we see signs that this may be the bottom. We still look for a moderate recovery from Q2, driven by stimulus measures, a trade deal with the US and an end to reductions in inventories.”

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

Feed news

Latest Forex News

Editors’ Picks

EUR/USD trades in narrow range ahead of the Fed

EUR/USD is trading in a narrow range around 1.1350, not going anywhere fast. Tension is mounting towards the Fed decision later in the day. Markets eye the dot-plot regarding future interest rate increases. 

EUR/USD News

GBP/USD at weekly lows as May requests short Brexit extension

GBP/USD slumped to the 1.3150 price zone after UK PM May confirmed she has officially requested an extension of Article 50 only up to June 30th and not beyond. EU Juncker warns withdrawal has to be completed before EU Parliament Election next May 23.

GBP/USD News

USD/JPY: mute around 111.40/50 ahead of Fed's definitions

The USD/JPY failed to break lower and bounced back to its latest comfort zone, now trading at around 111.50, pretty much unchanged from Friday's close. 

USD/JPY News

UK inflation preview: Why GBP/USD risks are skewed to the upside

The headline Consumer Price Index stood at an increase of 1.8% in January, and a repeat of the same number is on the cards for February. Core CPI was at 1.9% and also here, a repeat is on the cards.

Read full report

Top 3 Price Prediction Bitcoin, Ripple, Ethereum: The market dances barefoot over the limits

The market is on the edge of the game. With those simple words, we can define the current situation. The Cryptocurrencies market has endured well in the past few days despite showing exhaustion in the leading indicators, but the game has come to an end.

Gold News

Majors

Cryptocurrencies

Signatures