Daily Insights Report 18/04/17

• 18 Apr 2017

China’s GDP growth beats what the market had expected. The Chinese economy advanced 6.9% year-over-year in Q1, higher than 6.8% in Q4 and above the expectations of 6.8%. It is the strongest expansion seen since Q3 2015. This comes supported by a surge in fiscal spending and faster rises in industrial output, retail sales, and fixed-asset investment. The strength of China’s industrial sector was helped by growth in Chinese credit – including shadow lending which takes place outside the formal banking sector. Regionally, the northern and western parts of the country still struggle with the fallout from a four-year slump in the oil, coal, and steel industries.

– With the level of stress in markets easing from last week, the yen was 0.2% weaker at 109.11 per Dollar.

– The AUD was down 0.3% at $0.7567, not far from a session low. This comes after the minutes from the Reserve Bank of Australia’s April meeting showed the central bank judged the weaker labor market and continued rise of the housing prices with precaution.

– The US Dollar index was up 0.1% at 100.35. After last week’s comments by the president stating that the Dollar was in fact too high, and adversely affecting the US economy.

Commodities

– Brent crude was up 0.1% at $55.40 a barrel, after falling 1% on Monday. However, West Texas Intermediate (WTI) crude was flat at $52.60 a barrel.

– Gold was little changed at $1,284.78 an ounce after declining for two days.

United States Dollar (USD)

Housing Starts (March)

The forecast for this data is 1.211 million annualized units. Unseasonably warm and relatively warm and stormy-free January and February likely boosted housing starts with some anticipation of resistance in March, with starts falling from 1.288 million to 1.211 million. Weather turned more seasonably normal in March and there was a snowstorm on the East Coast. This likely cost builders a few days as they would not be able to resume construction. A start is counted when the ground is broken for the foundation. The weakness will be concentrated in single-family construction. Single-family starts in permitting places are running ahead of permits. Since permits typically come before starts, we can anticipate this to decline slightly because of the drop in starts. The forecast is likely to see a modest gain in multifamily houses because the issue of permitting places and starts is less.

Industrial Production (March)

A forecast for 0.4% growth for Industrial Production. It is expected to grow in the month of March after remaining constant in February. Utilities will provide a significant boost to industrial production since weather became more normal in March. We look for output to have risen 5% in March. Mining would likely have growth by 1.0%.

Technical Analysis

USDCHF

Looking at the daily chart of this currency pair, it can see a triangle breakout opportunity. The pair is currently oscillating around the 1.00 level. One thing worth noticing is that the 100 day SMA is above the 200 day SMA, showing that the market has been more up than down since the fourth quarter of 2016. Because of this, the odds are looking that the pair will break the triangle and go upwards.