China’s economy slows down
Further concerns for the Chinese economy came yesterday as the latest figures showed the first fall in exports since January 2012. Chinese exports declined by 3.1% in June from a year earlier, well below the market consensus forecast of a 4% increase. This latest release will raise fresh concerns of the impact of a global slowdown on the demand for Chinese goods. Market analysts will now be looking ahead to China’s Q2 GDP figures out early next week.
In the US, the minutes of the FOMC June meeting took the markets by surprise by revealing that there is no majority agreement of when QE tapering should begin or how fast it should proceed once it starts. Fed Chairman, Ben Bernanke, did not specify a start date other than “later this year” while a wide disparity of views among members suggest any tapering is still dependent on further improvements in the labour market.
The Fed minutes resulted in a significant sell-off in the US dollar with EUR/USD gaining around two cents and trading above the $1.30 level early this morning. GBP/USD has also recovered to above $1.5075 while GBP/EUR has dipped to around €1.1550.