[B]Recap Of The Week?s Top Stories?[/B]
Economic data was bullish for the Chinese economy as it becomes evidently clear that policy makers will have to do far more in curbing the possibility of an overheating economy. For the quarter, overall growth surged to the highest level in 12 years, advancing by 11.9 percent. The figure overshot estimates of 11 percent growth and were coupled by healthy rates of output in the industrial production survey.
[B]Chinese Yuan Rockets Higher On Record Growth [/B]
Economic data was bullish for the Chinese economy as it becomes evidently clear that policy makers will have to do far more in curbing the possibility of an overheating economy. For the quarter, overall growth surged to the highest level in 12 years, advancing by 11.9 percent. The figure overshot estimates of 11 percent growth and were coupled by healthy rates of output in the industrial production survey. Not a surprise for the market, the growth figures were widely supported by healthy consumer spending figures which topped at 16 percent for the month. Ultimately, traders continued to side with further speculation on a possible shift to a more flexible exchange rate regime in order to curb price increases which accelerated at an impressive 4.4 percent. Far above forecasts by policy makers, the consumer prices report suggests that the Chinese economy may be accelerating too far too fast. As a result, aggressive tightening is expected, bolstering a likely revaluation in the near term. Estimates pit the currency to gain by almost 3 percent in the next 6-12 months.
[B]Europe?s Trade Balance Widens WithChina[/B]
Surprising officials, it was revealed today that Europe?s trade gap with China widened in the first four months of the year by as much as 29 percent to 35.2 billion euros from 27.2 billion in the year earlier comparison. In detail, imports from China grew by 23 percent in the period as exports to China rose by less, rising only 12 percent. Bearish for the Euro, the findings will further fuel recent pleas by French President Sarkozy of global trade partners to allow their currencies to weaken, helping to take speculative pressure off of the Euro as an appreciated single currency has dampened the competitiveness of Europe?s exports. “The problem isn?t the value of the Euro, but the value of other currencies?France wants to put an end to monetary dumping which leads some currencies in the world to be managed in ways that have nothing to do with the market,” Sarkozy noted in a meeting with German Chancellor Merkel earlier this week. Incidentally, Chancellor Merkel has recently come round backing the notion and stating that the G8 nations “must keep an eye” on current yuan exchange rates.
[B]US[/B][B] Requests Repeal Of Chinese Import Ban[/B]
In response to a recently implemented ban on US meat products, authorities have directed focus to a previous notice requesting that the ban on seven of eleven plants cited in Chinese reports be repealed. The letter, dated July 5th and prior to the announcement of the ban, additionally requests the scientific test results that were done in order to implement the restrictive policy by Chinese officials over the weekend. As the episode lingers on, further developments will likely culminate up to the scheduled visit by officials within the next three months in Washington. Meeting with US trade representatives, officials from Beijing will be visiting on the grounds of an amicable resolution. However, optimism in the near term is thin at best as officials wait for the USDA?s evaluation of the testing process, judging whether or not China was in breach of trade obligations.
[B]Singapore[/B][B] Export Reports Disappoint[/B]
Although rising by 2.9 percent on the monthly evaluation, exports from the economy of Singapore disappointed consensus estimates for the month of June. Far below consensus expectations of 5 percent, the annualized figure printed far lower, rising by only 1.2 percent. Attributed to the rather lackluster performance was another dismal print for the electronics sector component, outweighing growth in the pharmaceutical sector. The electronics subcomponent declined slightly better than the previous dip, slipping 13.1 percent in the month as global demand continues to wane for electronic products like hard drives and semiconductors. Incidentally, the report forced government officials to downgrade second half export growth estimates, which subsequently weighed heavily on the Sing dollar.
[B]Hong Kong[/B][B] Unemployment Falls To Lowest In Nine Years[/B]
Hong Kong?s unemployment rate dropped unexpectedly against consensus estimates to the lowest level in almost nine years. Adding to labor forces were bank, retailers and restaurants during the period as expansion in the mainland is helping to boost the Hong Kong economy. For the three months ending in June, the unemployment rate dropped to 4.2 percent as total employment increased to a jaw dropping record of 3.49 million according to the Census and Statistics Department. Good for the economy, the report was poorly received by the market as some feared tightening measures to come into play in the short term. [B]
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