October 21, 2020

Chinese data show China is back to the recovery path

LQDFX Forex news Blog | Chinese data show China is back to the recovery path

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The dollar dipped and commodity-linked currencies gained as Chinese data pointed to economic recovery after coronavirus-led shutdowns.  

Upbeat Chinese data revived optimism around an economic rebound. China’s industrial output accelerated in eight months in August. Further, retail sales grew for the first time this year, beating analysts’ forecasts.

British drug maker AstraZeneca restarted its vaccine trial in Britain on Saturday, but it remains on hold in the United States.

U.S. data is due at 1315 GMT, is likely to show industrial production slowed in August.

Also, the market is looking ahead to the Federal Reserve’s two-day policy meeting starting on Wednesday.

It would be the first policy meeting since Fed Chair Jerome Powell announced a more accommodative stance on inflation. It is also the last Fed meeting before the Nov. 3 U.S. presidential elections.

Expectations from the Fed have increased amid a stalemate in talks for fiscal relief and a sharp pullback in heavyweight technology stocks earlier this month.

On the Brexit front, traders showed little reaction to the government winning the first parliamentary vote on its controversial new Brexit bill.

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Forex – Chinese data show China is back to the recovery path

Riskier currencies gained, with sentiment also boosted by hopes for a COVID-19 vaccine.

The US dollar slipped, although it recovered some of its overnight losses in early London trade. The dollar index edged 0.1% lower on the day at 92.946.

The Japanese yen nudged higher as Japanese Chief Cabinet Secretary Yoshihide Suga won a ruling party leadership vote.

The Australian dollar rose after its central bank meeting minutes showed no signs of a further cut to record-low interest rates. It was at 0.7323, up 0.5% on the day.

The New Zealand dollar was up 0.3% versus the U.S. dollar, while the Canadian dollar rose around 0.2%.

The euro was up 0.2% at $1.1891 after a surprise jump too in Germany’s ZEW sentiment survey. Despite headwinds from Brexit and rising coronavirus infections, the ZEW economic sentiment survey showed.

The British pound rose after better-than-expected jobs data on Tuesday. British Prime Minister Boris Johnson faced opposition within his party to proposed legislation that would breach the Brexit treaty.

Against the euro, sterling also gained, with the single currency down 0.1%, at 92.15 pence per euro.

Gold rose to its highest in nearly two weeks on Tuesday, propelled by a softer dollar. Spot gold rose 0.6% to $1,968.94 per ounce by 1157 GMT, having earlier climbed to $1,971.71, its highest since Sept. 2. U.S. gold futures rose 0.7% to $1,977.10 per ounce.

PLEASE NOTE The information above is not investment advice.

Sources: Reuters, Investing, CNN money