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Asian Focus: If China is turning a corner will the RBA stand pat?
In this video, Yvette Roper of TradingFloor.com interviews Andrew Robinson, Market Analyst for Saxo Capital Markets in Singapore, about whether there are actually real signs of a recovery underway in China as reflected by recent data. He also shares his thoughts on the likelihood of the Reserve Bank of Australia easing interest rates at its November meeting.
The official China PMI for October is expected to show that there is some degree of recovery underway in the Chinese manufacturing sector. Domestically the data for this month was slightly better, with industrial production and retail sales both firmer than expected. I think it is indicating that maybe China is turning the corner, says Andrew Robinson.
As the health of the Australian economy is highly dependent on the buoyancy of China, any signs of Chinese recovery would be welcome news for the land Down Under. Based on the market's somewhat brighter outlook on China there is an increased likelihood that the Reserve Bank of Australia will not lower its key interest rate at it last meeting for the year on November 6. "At the moment we are looking at just over a 50 percent chance of a 25 basis point rate cut at the beginning of November," says Andrew. "At the start of October we were looking at a 100 percent chance." Nevertheless Andrew still sees the RBA cutting its key interest rate.
With the data in both China and Australia perhaps bottoming at the moment the argument for a rate cut might be diminishing, but I do think they will produce one at this time. "I can’t see any issue with giving the local economy a bit of a tickle before Christmas," says Andrew.
See more of Andrew's Asian market commentary on TradingFloor.com
05:34 minutes
Tags: andrew robinson, andrewrobinson, audusd, australia, australian economy, bank of japan, boj, central banks, china, chinese economy, cpi, easing, forex, gdp, interest rates, macro, qe, rates, rba, tradingfloor.com, yvetteroper