David Long

Bounce on ECB and China GDP

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Forex Market News


Data out yesterday in China saw continued strong growth with GDP at 7.3% and industrial production at 8%. Both numbers a tad higher than expectations. This flowed into the commodity markets all of which had strong(ish) moves, a turnaround from recent trends. The Loonie and the Aussie (briefly) both jumped on the news with the Loonie sustaining the run. The BOC meet tonight and it is expected to maintain rates at 1%. Plonker Poloz speaks afterwards and that will be the key for the currency’s direction.


Stocks continue the bounce with strong earnings still pushing prices higher, led by Apple. The ECB also had a positive effect on the markets both sides of the Atlantic. Although the bank doesn’t meet this week investors are eyeing Draghi and expecting him to do more…mmm good luck. I did see the ECB in the bond market buying Italian bonds, and maybe that is what drove this sentiment. This isn’t news as last month Draghi said he would do this. However, it is now widely and wildly expected that Draghi will do some sort of quantitative easing before the year is out. I have heard all this before so take it with a grain of salt. That said, it is doing to the markets what we expect, pushing the Eurodollar lower and stocks higher.

US Rates

Speaking of shifting sands, last week the US rate rise expectations for October 2015 sat at 51%, overnight that moved to 49%. In another wise pretty quiet night this saw the US dollar whip about, as traction for the continued trend tries to take hold. I do get the sense it is still on the cusp right now.

Finally whilst on rates, the RBA are worried that with low rates and low yield investors are seeking riskier assets to get a decent return. Not that they can do anything about that, they are “just sayin”.

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