China’s economy is growing again after its worst three months in decade. China GDP returned to growth in the second quarter, up 3.2%.
The world’s second largest economy grew 3.2% in the April-to-June period compared to a year ago. The bounce was still the weakest expansion on record and followed a steep 6.8% slump in the first quarter. However, retail sales data was worse than expected. Domestic consumption and investment remained weak.
China said on Thursday it will stick to the Phase 1 trade deal it reached with the United States earlier this year. But it warned that it will respond to “bullying” tactics from Washington, as relations continue to deteriorate.
The White House said it had not ruled out further sanctions on top Chinese officials to punish China for its handling of Hong Kong. The United States also said it was studying the national security risks of Chinses social media applications.
In Europe, the focus is on the ECB’s meeting, at which it is expected to announce no new policy measures. The European Central Bank has already bought record amounts of debt as part of its emergency response to COVID-19.
Investors are also focused on the EU summit, at which the proposed EU-wide coronavirus recovery fund will be discussed.
The IMF’s Managing Director warned that a second major wave of infections could trigger more economic disruption. The effect of new infections on daily market moves is not clear-cut as the more economies shut down, the more stimulus is expected. Georgieva said $11 trillion in fiscal measures by G20 members have put a floor under the global economy.
START TRADINGForex – China GDP growth beats expectations
Surging U.S. virus cases dampened sentiment and weighed on equity markets. In turn equity markets injected some strength in the U.S. dollar, a proxy for global risk sentiment. China GDP growth failed to lift sentiment.
The dollar index firmed, up 0.1% at 96.104, having hit a one-month low on Wednesday. The U.S. dollar strengthened as investors focused on poor retail sales instead of China GDP growth last quarter.
Against the safe-haven Japanese yen, the dollar was trading neutral at 106.95.
The Australian and New Zealand dollars slipped. The growth-sensitive Australian dollar slipped under 70 cents after the data. The Aussie was last down 0.3% at 69.84 versus the greenback.
The euro-dollar, which hit a four-month high of $1.1452, edged back down, at $1.1406. The euro was last trading down 0.1% at $1.1401.
The biggest mover was the British pound as it remained strongly correlated to risky assets, falling last by 0.3% to $1.2548. The sterling also weakened against the euro, falling 0.2% to 90.84 pence before an ECB meeting later on Thursday.
Oil prices eased after OPEC+ agreed to taper record supply curbs from August. However, the drop was cushioned by hopes for a swift pick-up in U.S.
Brent crude fell 18 cents to $43.61 a barrel. U.S. WTI crude was down 29 cents, at $40.91 a barrel at 0800 GMT.
Gold prices eased somewhat but were near a nine-year peak.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money