Aussie is mildly lower against the greenback on news from China. Chinese equities slumped yesterday as the government sought to curb margin lending. The CSI 300 plummeted -7.7%, the biggest single session fall in 6-years. The China Securities Regulatory Commission said last Friday it had banned Citic Securities, Haitong Securities and Guotai Junan Securities from opening new margin trading accounts for 3 months, following investigations into high-risk margin trading. The Commission also released draft rules to curb the growth of company-to-company loans. Nonetheless, Chinese stock markets stabilized mildly today after GDP data.
The macroeconomic data released earlier today gave further evidence of slowdown of Chinese growth. GDP grew 7.3% yoy in 4Q14, stayed unchanged from 3Q14 and was better than expectation of 7.2% yoy. Growth in full-year 2014 came in at 7.4%, compared with the government's target of 7.5%. On other details, factory output added 7.9% yoy in December, better than consensus of 7.4% and November's 7.2%. Retail sales rose 11.9% yoy in December, compared with market expectations of 11.7%. Fixed asset investment rose 15.7% for the full year of 2014, in line with expectations but slightly lower than the 15.8% growth in the first 11 months of the year.
Euro is steady in range against the greenback. German PPI and ZEW economic sentiment will be released today but focus will be on ECB meeting later on Thursday. While an announcement of further QE (inclusion of government bond purchases) has largely been priced in, the key is now on the details, i.e. the timing of actual implementation, the size, whether national central banks (NCBs) would share risks. The market widely anticipates the ECB would announce a program or 500B euro with the actual buying beginning in March. There have been speculations that the program would include no risk sharing (each NCB would be responsible for its own QE losses) which, if materialized, would indeed be a negative surprise.
US market will return from holiday today with release of NAHB housing market index. Canada will release manufacturing shipments.