Forex traders received plenty of data out of China today which continue to point towards a slowing Chinese economy. China, now the world’s biggest economy, is responsible for the majority of Asian as well as global economic activity. Commodity exporters such as Australia, Canada and New Zealand heavily depend on Chinese demand. This is the reason why the Australian Dollar, the Canadian Dollar and the New Zealand Dollar are often referred to as commodity currencies.
The slowing Chinese economy will have ripple effects throughout the global economy. The world’s second largest economy, the Eurozone, also faces recessionary pressures and lags the overall global economy. China released its third-quarter GDP figures today which showed GDP growth at 1.9% quarter-over-quarter. This beat estimates for a growth rate of 1.8%, but came in below the 2.0% growth rate reported in the second quarter.
Year-over-year Chinese GDP expanded at a 7.3% rate. This also beat estimates for a growth rate of 7.2%, but came in below the 7.5% growth rate reported in the second-quarter. Year-to-date Chinese GDP grew at a 7.4% rate. This matched economists’ expectations as well as a second-quarter growth rate. Overall Chinese GDP grew faster than expected, but slower than in the second-quarter.
Other Chinese data pointed towards a slowdown as well. Fixed assets excluding rural were reported at 16.1% in September year-over-year. Economists expect a slowdown to 16.3% from the 16.5% reported in August. Retail sales in China grew by 11.6% in September year-over-year while retail sales year-to-date rose by 12.0%. Expectations called for an increase of 11.7% and 12.1% which can be compared to 11.9% and 12.1% increase reported in August. The slowdown in retail sales is exceptionally worrisome.
The sole bright spot today came out of Chinese industrial production data which showed industrial production rose by 8.0% in September year-over-year and 8.5% year-to-date. Expectations called for an increase of 7.5% and 8.4% respectively. These can be compared to the 6.9% and 8.5% growth rate reported in August. China has reported a number of economic reports which towards a slowing Chinese economy. Should the slowdown continue commodity currencies are expected to feel a prolonged impact.