After the publication of the Activity Data of April of Chinathe National Statistics Office (NBS) expressed its perspective on the economy during its press conference on Monday.
Outstanding comments (via reuters)
- The demand for productivity grew constantly.
- The employment situation is generally stable.
- The economy grew constantly against pressure, continues to develop in an ascending trend.
- China is actively diversifying, expanding trade with the nations of the Strip and the Route initiative.
- But there are many favorable conditions for sustained economic recovery.
- Although the external impact increased in April, the trend of economic recovery did not change.
- The gradual implementation of policies will be conducive to the recovery and sustained improvement of the economy.
- As the effect of policies continues to show, the contribution of consumption to economic growth will continue to increase.
- We need to recognize that the internal driving force for investment growth is ‘obviously insufficient’.
- We need to improve investment efficiency and continue optimizing the investment structure.
- Foreign trade exceeded difficulties and maintained stable growth in April, demonstrating strong international resilience and competitiveness.
- The reduction of tariffs by China and the United States in the next stage is conducive to the growth of bilateral trade and the recovery of the world economy.
- Faced with the increases in external shocks, China’s foreign trade has been able to resist pressure and continue to grow.
- China has conditions, capacity and confidence to face various challenges.
- It is necessary to see that currently low general prices will increase pressure on companies and affect the growth of residents income.
- Full game should continue to the role of macroeconomic policies and promote the reasonable recovery of prices.
- The next step is to continually expand demand, optimize and adjust the industrial structure, and promote that producers’ prices return to a reasonable range.
Market reaction
AUD/USD Receive new offers about 0.6420, adding 0.28% 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.
