Currency: Yuan, Euro Rises, Dollar Slips amid China’s Data

After the better-than-predicted economic data out of China easing concerns over the global economic slowdown. The dollar weakened versus the euro and yuan on Monday in Europe.

According to the official data released, since quarterly records began, China’s economy grew at the slowest pace from three months to June.

Last year, the gross domestic product increase by 6.2% only from the second quarter. It is weaker from the previous 6.4% rate in the first quarter.

As the forecast in June for various components of GDP came in stronger, investors felt relief.

Meanwhile, as retail sales growth heightened to 9.8% as well as industrial production increases by 6.3% on the year.

However, Holger Schmieding a Berenberg Bank’s chief economist referred to the monthly data which “are too volatile to herald an immediate upturn.”

The dollar was weakened by 0.1% after the news, versus the yuan, trading at 6.8721. Within its recent range, it is still well.

As the Eurozone growth relies more on Chinese demand and reflecting the increased correlation between the currencies, the euro benefited from the data. It rose to a four-day high of $1.1278.

Helping South Africa to test a five-month high versus the dollar, commodity prices were lifted by data.

In a research note, Analysts at Nordea Markets argued that the euro might have further benefit in the near term against the dollar due to the particular liquidity dynamics in the two currencies.

Meanwhile, a new round of new long-term loans was proposed by the European Central Bank. They are likely to stop excess liquidity in the banking sector that is dwindling.

The Federal Reserve’s suggestion of ending the balance sheet reduction and the chance of an interest rate cut can improve the dollar liquidity.

Forex Markets: China Economic Data Bolster Aussie

On Monday, an analyst has seen a signaling move to revive the spending in the world’s second-biggest economy as the Australian dollar reached a 10-day high from China’s economic data.

The Aussie increased by 0.2% to $0.7033 versus the U.S. dollar. It improved contrary to the safe-haven yen and the Swiss franc.

Improving from a 17-year low in the previous month, China’s industrial output soared in June. The retail sales compared with the 8.3% a slowing from May’s figures upsurge in June by 9.8%.

China is Australia’s biggest export market has resulted in Aussie reaching its highest point since July 4.

Last week, the yuan rose against the dollar, reaching its highest rate. On the other hand, the New Zealand dollar also surges, hitting its two-week peak.

The head of NZ strategy at Westpac Banking Corporation in Auckland, Imre Speizer said, “China’s economy is finding a base, and it was not as weak as feared, so risky currencies go up.”

He also stated, “The market is wanting to price a lot of risk into the Aussie.”

In the June quarter, growing by 6.2% compared to a year earlier, China has posted its quarterly gross domestic product. The second-biggest economy has also been on its slowest pace of growth in 27 years, as expected.