China’s economy slowed to the lowest level since 2009 in the third quarter of the year but the growth rate beat forecasts, easing fears of a hard landing. GDP expanded by 6.9% in the third quarter, above estimates of 6.8%, though this was down from 7.0% in the second quarter.
With signs of government stimulus measures boosting consumption, the buoyant service sector helped growth come close to the official target of 7% for economic growth as the manufacturing sector struggles. Industrial production rose by 5.7% year-on-year in September, below estimates of 6.0% and is the slowest rate since March. Fixed-asset investment also disappointed and was up by 10.3% in the 12 months to September, bellows estimates of 10.8% and down from 10.9% in August. Retail sales remained robust however, and were up by 10.9% year-on-year in September, slightly higher than 10.8% in the previous month.
Shares in China gave up earlier gains from the better-than-expected GDP data, with the Shanghai Composite moving lower by -0.6% in late Asian trading. The aussie jumped by over 0.5% against the US dollar as markets were relieved by the GDP numbers. The kiwi was also boosted but to a lesser extent, moving higher to 0.6802 against the greenback.
The Japanese yen was weighed down slightly by a Bank of Japan quarterly survey that showed business outlook in four key manufacturing regions of the country declined from three months ago. In the report, the Bank of Japan said there was no immediate need for further monetary expansion. However, investors have not excluded a possible surprise move by the central bank to expand QE later this year.
The dollar recovered last week on stronger-than-expected data, which was supportive of a rate hike this year, and was broadly steady on Monday. It edged lower to 119.28 yen in late Asian session, having earlier peaked at 119.60 yen. The euro was steady around 1.1371 dollars but slightly weaker against the pound at 0.7359. Meanwhile, cable climbed to 1.5454 in late Asian trading.
The rest of the day is looking exceptionally quiet with no major data expected. The Canadian elections will be the main focal point in US trading as polls point to the ruling Conservative party losing to the Liberal party. Speeches by the Fed’s Lael Brainard and Jeffrey Lacker could also attract some attention.