The Q3 numbers came in ahead of expectations, with GDP printing 7.3% (vs 7.2% expected) while industrial production surged 8% (vs 7.5% expected). Fixed asset investment and retail sales readings were relatively in line with expectations. The numbers were well received by the market and the GDP reading perhaps shows officials are not quite as far off their target as the market was starting to price in. This also means the authorities will be looking to open the taps enough to ensure the growth target is achieved.
On the back of China’s data, AUD/USD managed to pop back above the $0.8800 handle. The pair barely reacted to the RBA monetary policy meeting minutes released earlier in the day. Traders will be hoping the positive China data will be enough to trigger a rally in commodities and related currencies.
There is a degree of resistance in this $0.8800 region and this might prompt some consolidation. However, overall momentum seems to be to the upside, with the next key level around $0.8900. In fact, the 38.2% retracement of the sharp drop through September comes in at $0.8933 – I feel that’s the level to look out for.