After the publication of the growth data of the first quarter of China and of December high -impact activity Chinathe National Statistics Office (NBS) expressed its perspective on the economy during its press conference on Wednesday.
Key comments (via reuters)
- The economy begins well with a continuous impulse of recovery as policies gain traction.
- The external environment is more complex and serious.
- The unfavorable impact of the international environment on China’s economy is deepening.
- The first quarter data underline China’s strong resilience and potential.
- Protectionism is rapidly increasing globally, the world economic order has been severely damaged.
- It is resolutely opposed to US tariffs that go against economic rules and WTO rules.
- The high US tariffs will generate some pressures on China’s trade and economy.
- The US tariffs will not change the long -term improvement trend in China’s economy.
- China is capable and has confidence in facing external challenges and achieving its objective of economic growth.
- Macroeconomic policies will be more proactive this year.
- China has a ‘rich’ set of policies to support the economy.
- China issued almost 1 billion Yuan in special local bonds in the first quarter, which helped boost investment.
- It will take measures to promote reasonable increases in consumer prices.
- It is crucial to keep consumer prices within a reasonable range.
- Low prices could affect corporate profits and employment.
Market reaction
AUD/USD It lies firmer about 0.6350, adding 0.10% in the day, at the time of writing.
Faqs Australian dollar
One of the most important factors for the Australian dollar (Aud) is the level of interest rates set by the Australian Reserve Bank (RBA). Since Australia is a country rich in resources, another key factor is the price of its greatest export, iron mineral. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and commercial balance. The feeling of the market, that is, if investors are committed to more risky assets (Risk-on) or seek safe shelters (Risk-Off), it is also a factor, being the positive risk-on for the AUD.
The Australian Reserve Bank (RBA) influences the Australian dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of the interest rates of the economy as a whole. The main objective of the RBA is to maintain a stable inflation rate of 2% -3% by adjusting the interest rates or the low. Relatively high interest rates compared to other large central banks support the AU, and the opposite for the relatively low. The RBA can also use relaxation and quantitative hardening to influence credit conditions, being the first refusal for the AU and the second positive for the AUD.
China is Australia’s largest commercial partner, so the health of the Chinese economy greatly influences the value of the Australian dollar (Aud). When the Chinese economy goes well, it buys more raw materials, goods and services in Australia, which increases the demand of the AU and makes its value upload. The opposite occurs when the Chinese economy does not grow as fast as expected. Therefore, positive or negative surprises in Chinese growth data usually have a direct impact on the Australian dollar.
Iron mineral is the largest export in Australia, with 118,000 million dollars a year according to data from 2021, China being its main destination. The price of iron ore, therefore, can be a driver of the Australian dollar. Usually, if the price of iron ore rises, the Aud also does, since the aggregate demand of the currency increases. The opposite occurs when the price of low iron ore. The highest prices of the iron mineral also tend to lead to a greater probability of a positive commercial balance for Australia, which is also positive for the AUD.
The commercial balance, which is the difference between what a country earns with its exports and what it pays for its imports, is another factor that can influence the value of the Australian dollar. If Australia produces highly requested exports, its currency will gain value exclusively for the excess demand created by foreign buyers who wish to acquire their exports to what you spend on buying imports. Therefore, a positive net trade balance strengthens the AUD, with the opposite effect if the commercial balance is negative.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
