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17 Apr 2014
Asia EM Express: Chinese premier says no 'strong stimulus' considered by government
FXStreet (Łódź) - Following the release of China's GDP numbers yesterday, which pointed to a considerable loss of economic momentum in the first quarter of the year, Chinese Premier Li Keqiang ruled out the possibility of adopting strong stimulus or policies which could push the fiscal deficit up.
Speaking at a State Council meeting, Li Keqiang signaled that instead reforms “to increase effective supply and meet new demand” would be implemented. It was also said that the reserve requirement ratio (RRR) for some rural banks would be reduced and that private companies that create employment would be given more tax breaks.
As far as the disappointing GDP data is concerned, the Chinese Premier stressed that “the reasonable range is an economic growth rate of around 7.5%,” and added that "'around' means it can be a bit higher or a bit lower, both of which are normal and within a reasonable range."
Meanwhile, according to the MNI, the China Securities Journal said on Wednesday that China's government is set to announce further measures to stabilize economic growth, with a focus on the service sector.
Economic data
South Korea's March Producer Price Index data, released on Wednesday by the Bank of Korea, showed no change month-on-month, following a 0.1% increase in February. On an annual basis PPI dropped 0.5%, following a 0.9% decline.
Malaysian CPI remained at 3.5% in March, as expected.
India's M3 Money Supply grew by 13.6%, slightly up from the previous 13.5% rise.
Singapore's non-oil domestic exports (NDOX) recorded a year-on-year 6.6% drop during March, following a 8.9% increase in February and against consensus of a 0.5% rise. On a monthly basis NDOX plunged 8.9%, compared with the 7% gain and below forecasts of -3%.
Euben Paracuelles and Lavanya Venkateswaran, Research Analysts from Nomura comment “This NODX print suggests that the advance Q1 GDP estimate of 5.1% y-o-y could be
revised lower.”
“The flash estimates for manufacturing growth in Q1 suggests industrial production (IP) in March was around 6.8% y-o-y, but given this lower than expected NODX reading, IP growth could be much weaker in March.”
On Thursday China published annual Foreign Direct Investment numbers, which edged up 5.5% in February, down from +10.4% recorded in January.
Technicals
The Chinese yuan rose slightly on Thursday against the dollar by 0.05% to 6.2184, following the PBOC's yuan midpoint fixing at 6.1575, up 0.02% from the previous day's 6.1589.
On Wednesday the daily FXStreet Trend Index was slightly bullish, and the OB/OS Index overbought. RSI was at 66 at the last close and has slid to 51 so far today. The Daily 2-StDev Volatility Bandwidth was shrinking at 86 pips, with ATR (14) shrinking at 101 pips. The 1D 200 SMA was at 6.1116, while the 1D 20 EMA was at 6.2025.
Speaking at a State Council meeting, Li Keqiang signaled that instead reforms “to increase effective supply and meet new demand” would be implemented. It was also said that the reserve requirement ratio (RRR) for some rural banks would be reduced and that private companies that create employment would be given more tax breaks.
As far as the disappointing GDP data is concerned, the Chinese Premier stressed that “the reasonable range is an economic growth rate of around 7.5%,” and added that "'around' means it can be a bit higher or a bit lower, both of which are normal and within a reasonable range."
Meanwhile, according to the MNI, the China Securities Journal said on Wednesday that China's government is set to announce further measures to stabilize economic growth, with a focus on the service sector.
Economic data
South Korea's March Producer Price Index data, released on Wednesday by the Bank of Korea, showed no change month-on-month, following a 0.1% increase in February. On an annual basis PPI dropped 0.5%, following a 0.9% decline.
Malaysian CPI remained at 3.5% in March, as expected.
India's M3 Money Supply grew by 13.6%, slightly up from the previous 13.5% rise.
Singapore's non-oil domestic exports (NDOX) recorded a year-on-year 6.6% drop during March, following a 8.9% increase in February and against consensus of a 0.5% rise. On a monthly basis NDOX plunged 8.9%, compared with the 7% gain and below forecasts of -3%.
Euben Paracuelles and Lavanya Venkateswaran, Research Analysts from Nomura comment “This NODX print suggests that the advance Q1 GDP estimate of 5.1% y-o-y could be
revised lower.”
“The flash estimates for manufacturing growth in Q1 suggests industrial production (IP) in March was around 6.8% y-o-y, but given this lower than expected NODX reading, IP growth could be much weaker in March.”
On Thursday China published annual Foreign Direct Investment numbers, which edged up 5.5% in February, down from +10.4% recorded in January.
Technicals
The Chinese yuan rose slightly on Thursday against the dollar by 0.05% to 6.2184, following the PBOC's yuan midpoint fixing at 6.1575, up 0.02% from the previous day's 6.1589.
On Wednesday the daily FXStreet Trend Index was slightly bullish, and the OB/OS Index overbought. RSI was at 66 at the last close and has slid to 51 so far today. The Daily 2-StDev Volatility Bandwidth was shrinking at 86 pips, with ATR (14) shrinking at 101 pips. The 1D 200 SMA was at 6.1116, while the 1D 20 EMA was at 6.2025.