SIGNS OF SLOWDOWN SEEN IN THE CHINESE ECONOMY

Data from the Chinese Bureau of Statistics showed that the industrial production surged to 7.0% in April, fueled by steel and automobile production. This was the only bright spot. The country’s retail sales and fixed asset investments missed estimates, showing signs of a slowdown. The fixed asset investment grew at an annual rate of 7.0%, which was lower than the estimated 7.4% and last month’s 7.5%. This was the lowest the number has been since 1999. The retail sales data showed that sales grew by 9.4%, which was lower than the expected 10.0% and last month’s 10.1%.

Germany released its GDP numbers for the first quarter that missed analysts’ forecasts. In the quarter, the country’s GDP expanded by 0.3% and at an annual rate of 1.6%. Analysts had expected the economy to grow by 0.4% and 1.6% respectively. The weakness in the economy has been blamed on factors such as weather and the uncertainty on trade. The EU also released its GDP numbers that met analysts’ forecasts. The data showed that the economy expanded by 0.4% and at an annual rate of 2.5%. The European Commission has reiterated that the economy will expand at the same pace as last year.

In the United States, retail sales data from the census bureau didn’t meet analysts’ estimates. The retail control for April was 0.4%, which was in line with estimates. Core retail sales grew by 0.3%, which was lower than estimates but higher than last month’s data of 0.5% and 0.4% respectively. On the other hand, retail sales for April were at 0.3%, which was lower than last month’s 0.8%.

In the UK, data from the Office of National Statistics (ONS) presented a mixed picture of the country’s employment numbers. The unemployment rate remained steady at 4.2% while the MoM employment change was at 197K, which was higher than expected. On the other hand, the data on wages was disappointing. Average earnings with bonuses grew by 2.6%, which was lower than the expected 2.7%. On the positive side, this growth was slightly higher than the rate of inflation. Another disappointment was productivity growth, which fell by 0.5% in the last quarter as hours worked grew without an equal economic growth.

GBP/USD

The cable fell today following the mixed jobs numbers. The pair is now trading at 1.3485, which is the lowest level since Thursday last week. At this price, the pair has an RSI of 21, which is its lowest level in weeks. At the same time, the MACD, which is pointed lower is at the lowest level since Thursday. The pair could continue moving lower – as shown by the double SMA below – but traders should be cautious because the pair is in oversold position.

EUR/USD

After four days of continuous gains, the EUR/USD pair reversed today. It is now trading at 1.1845, which is its lowest level since Friday last week. The euro weakness was as a result of the disappointing EU growth data. The pair’s 14-day RSI is currently at 18, which is way off from the 30. The MACD has also dropped to the lowest level in weeks. This does not mean that a reversal is in sight for the pair. This will likely be determined by the EU CPI data, which will be released tomorrow. The next important level for the pair will be 1.1820, which is its lowest YTD level.

USD/JPY

The USD/JPY pair jumped today to reach a high of 110.26, which is the highest level since February this year. It is now trading slightly higher than the monthly and the 200-day SMA. There is a probability that the pair could reverse. The bulls are losing momentum as shown by the bulls’ power indicator below. At the same time, the RSI is currently above 80, a level that is considered overbought.