5 Mar 2014
AUD traders: Watch China's National People's Congress Headlines
FXStreet (Bali) - China’s National People’s Congress kicks off today in Beijing, following last November's critical third plenum.
The meeting will gather plenty of attention for traders in Asia, especially those with an interest of the Australian Dollar.
During today's meetings, economic targets and reform policies are set to be announced, which means that any headlines referring to China growth projections will be closely scrutinized by traders.
China's official GDP target has been set at 7.5%, however, it is widely expected to be re-adjusted lower at some point as China moves towards tighter reform policies. There is even rumours floating the market that a formal target might be abandoned.
According to Bank of America's Ting Lu: "The government might emphasize the role of “projection” of growth targeting and Premier Li’s growth floor could be different from the growth target in 2014."
In view of Carlos Tejada from the WSJ: "Last year, China held fast to a growth target of “about 7.5%,” then just eked past it with 7.7% growth for 2013", adding that "most economists believe Beijing will stick to the 7.5% rate but that it will become harder meet that target as the country’s economy matures."
AUD watchers should expect a negative reaction in the currency should lower GDP targets be announced. In the event that China decides not to provide a 'specific' target, that should also be perceived as AUD negative as it suggests lesser confidence to deliver on previous targets. On the contrary, if China turns more optimistic on growth targets (unlikely) or keeps its commitment to post a 7.5% annual growth, the AUD may see buying interest returning.
The meeting will gather plenty of attention for traders in Asia, especially those with an interest of the Australian Dollar.
During today's meetings, economic targets and reform policies are set to be announced, which means that any headlines referring to China growth projections will be closely scrutinized by traders.
China's official GDP target has been set at 7.5%, however, it is widely expected to be re-adjusted lower at some point as China moves towards tighter reform policies. There is even rumours floating the market that a formal target might be abandoned.
According to Bank of America's Ting Lu: "The government might emphasize the role of “projection” of growth targeting and Premier Li’s growth floor could be different from the growth target in 2014."
In view of Carlos Tejada from the WSJ: "Last year, China held fast to a growth target of “about 7.5%,” then just eked past it with 7.7% growth for 2013", adding that "most economists believe Beijing will stick to the 7.5% rate but that it will become harder meet that target as the country’s economy matures."
AUD watchers should expect a negative reaction in the currency should lower GDP targets be announced. In the event that China decides not to provide a 'specific' target, that should also be perceived as AUD negative as it suggests lesser confidence to deliver on previous targets. On the contrary, if China turns more optimistic on growth targets (unlikely) or keeps its commitment to post a 7.5% annual growth, the AUD may see buying interest returning.