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Forex Flash: China - a window of a global demand swoonlet? - Societe Generale

FXstreet.com (Barcelona) - Kit Juckes, Global Head of Currency Strategy at Societe Generale notes that China’s HSBC ‘Flash’ PMI has heightened the sense that the global economy is in yet another spring-time soft patch.

He adds that the in house SocGen China expert, Wei Yao, believes that the data paints a picture of a painfully slow recovery in China´s manufacturing sector and observes that all major sub-indices retreated, with the export reading leading the rout, down to 48.6 from 50.5 in March to its lowest level in 6 months.

He notes that the importance of the Chinese data is probably in what they tell us about global demand as much as the message about the Chinese economy. He sees that the national PMI data (less volatile than the HSBC ones) seem pretty consistent with the GDP trends and suggest a failure to bounce rather than a further slowdown. Nevertheless, Juckes adds that “the export weakness tells us that demand elsewhere is soft which was suspected anyway), and the on-going re-balancing of the economy continues to argue for potential weakness in industrial (i.e., not gold) commodities.” He thinks the implications for inflation, currencies and emerging market assets will be one of the enduring themes through the coming months.

Forex Flash: Japan incurs largest trade deficit since 1979 – RBS

Japan incurred a JPY 8,169.9bn trade deficit in FY12, the largest deficit for comparable data available since 1979 andsignificantly exceeding the previous year's JPY 4,422bn deficit. According to the RBS Research Team, “Stronger demand for thermal-fired power plant fuel accompanying nuclear plant suspensions since the Great East Japan Earthquake event raised import value, and exports contracted due to weaker demand in Europe from declining growth and setbacks from slower economic activity in China and strained Japan-China political ties.”
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Forex Flash: Stronger preference for Japanese equities continued - Nomura

Nomura Strategist Yujiro Goto notes stronger preference for Japanese equities continued and domestic investors are estimated to have sold JPY78bn (USD0.8bn) of foreign currency-denominated toshins last week, according to NRI.
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