Forex - Aussie weaker ahead of Q2 China GDP, industrial output

Xavier Trudeau
Juillet 17, 2017

Asian stocks were mixed on Monday following the release of better-than-expected China's second-quarter GDP and on bets that the Federal Reserve's policy will remain accommodative following lacklustre United States data.

The euro was last mostly flat against the dollar at $1.1465, while the dollar recovered from Friday's almost two-week low against the yen of 112.24 yen to last trade 0.3 percent higher against the Japanese currency at 112.83 yen. Hong Kong's Hang Seng Index rose 0.36%.

On the mainland, markets traded in negative territory following the release of second-quarter GDP data. Japan is closed for a public holiday. China reported better-than-expected second quarter gross domestic product figures. The Chinese government is aiming for annual GDP growth this year to come in around 6.5%. The benchmark rallied late Friday on optimism interest rates will stay lower for longer after June inflation and retail sales missed expectations."With Yellen emphasizing that rate direction is on price inflation performance, markets are expecting an extension to the more accommodative environment after the inflation data", said Jingyi Pan, market strategist at IG Asia Pte Ltd.

"The better-than-expected China data has been supportive for emerging markets" and the Australian dollar, said Sireen Harajli, FX strategist at Mizuho in NY. The dollar index, which measures the dollar against a basket of currencies, traded at 95.165 at 10:18 a.m. HK/SIN.

Against the yen, the greenback was firmer at 112.62 after sinking last Friday. The Aussie shot to a more than two-year high of $0.7840, with bulls targeting the 200-week moving average around $0.8018, but was last down slightly against the dollar at $0.7819.

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