The US Dollar rose against most majors as the IMF once again downgraded global growth prospects for 2015 and 2016. The US is the only major economy being upgraded, while the expected growth rate of China, Japan, Eurozone and Russia were cut. The economic activities of major oil producing countries will fall on lower oil prices.
The IMF forecasts China will only expand by 6.8% in 2015, after the second biggest economy itself had just released its 2014 growth rate as 7.4%. Although 7.4% is the slowest GDP growth in 24 years, it is mostly in line with the government target and slightly better than expected. The pressure on Beijing is to maintain the high-speed expansion, so moderate easing is expected.
The Aussie Dollar fluctuated between 0.8150 and 0.8220 after the GDP release. However, the outlook of this pair is still bearish. The acceptable GDP growth means that large scale investments from Chinese authority may not happen in the short run. Hence, the needs of iron ore and other materials will remain weak. I suppose, shortly the AUD/USD will break the 0.8150 support and test the 0.8030 bottom again.
The cut of global outlook surged the safe-haven demands. Gold prices rocketed to $1292 per ounce and touched $1297 during the US session, highest since August 2014. The RSI reached 72, showing gold is overbuying in the short term, especially confronting the $1300 integer level.
The USD/JPY kept rising after I mentioned the bullish reversal sign on the daily chart. The consolidation will continue and the 120 level will be the next target.
Back to stock markets – the Shanghai Composite rebounded 1.82% to 3173. ASX 200 fell 0.1% to 5307. The Nikkei Stock Average gained 2.07%. In European markets, the UK FTSE was up 0.52%, the German DAX gained 0.14% and the French CAC 40Index rose 1.16%. The US market closed rose slightly after the holiday. The S&P 500 closed 0.15% higher to 2023. The Dow gained closed flat at 17515, and the Nasdaq Composite Index rose 0.44% to 4655.
On the data front, Australia Westpac Consumer Sentiment will be released at 10:30 AEDST. BOJ press conference will be today in the afternoon. UK jobs report and BOE rate decision will be out at 20:30 AEDST.