Australian Greenback, AUD/USD, China GDP, Iron Ore, US Greenback, Fed – Speaking Factors

• The Australian Greenback firmed once more after strong China GDP figures
• China’s re-opening is but to hit the expansion numbers however has helped commodities
• The US Greenback seems weak. Will it increase AUD/USD to a brand new peak?

The Australian Greenback leapt towards yesterday’s six-month peak in opposition to the US Greenback with China’s GDP a lot better than forecast.

Chinese language GDP printed at 2.9% year-on-year for the fourth quarter in opposition to expectations of 1.6% and three.9% beforehand.

Different Chinese language information was launched on the similar time, with industrial manufacturing for the yr to the top of December coming in at 1.3% as an alternative of 0.1% anticipated and a couple of.2% prior.

Retail gross sales numbers for a similar interval had been -1.8% effectively above the -9.0% forecast and -5.9% beforehand, though nonetheless unfavourable.

The GDP numbers seize a locked-down China that re-opened close to the top of the quarter. Massive outbreaks of Covid-19 materialised quickly and so the financial advantages could not turn into obvious for a while.

At the moment’s information may be very optimistic information for an economic system that has the potential to strengthen additional as soon as Covid-19 restrictions are fully lifted and case numbers begin to drop.

Previous to the GDP launch, the Folks’s Financial institution of China (PBOC) injected CNY 504 billion of liquidity through revere repos. That is essentially the most since January 2019.

Markets are already pricing in an expansionary outlook for the world’s second-largest economic system with the CSI 300 fairness index at its highest degree since August.

Commodity markets have additionally been underpinned with base metals notching up vital positive aspects to this point this yr. Iron ore and copper, two of Australia’s prime exports, are a lot greater and have added to perceptions of the Aussie Greenback benefitting from the China re-open.

Elsewhere, the US Greenback is beneath stress because the market seems to expect the Federal Reserve to ease up on its aggressive financial coverage tightening later this yr.

That is regardless of constant messaging from a number of members of the Federal Open Market Committee (FOMC) stating that charges might want to go greater and keep there.

Gold can also be buying and selling close to its highest degree since April final yr as the dear metals decide up curiosity from the weaker US Greenback and the broader rising urge for food for metals.

With the China re-opening story and the seemingly endangered standing of the ‘large greenback’, it’s little surprise that AUD/USD is experiencing some bullish momentum.

CHART – AUD/USD, IRON ORE, COPPER, GOLD, DXY INDEX (USD)

Chart created in TradingView

— Written by Daniel McCarthy, Strategist for DailyFX.com

Please contact Daniel through @DanMcCathyFX on Twitter