China’s Gross Domestic Product (GDP) for the last quarter came in at 7.9%, which is higher than forecast. Recent numbers suggested that China’s economy turned the corner and avoided a hard landing.
The Chinese government continues to stimulate the economy via big government projects, which include the building of roads, subways and railways. All this spending will also indirectly boost the Australian economy because Australia exports a huge portion of raw materials to China. As long as the Chinese keep building, the export market for Australia’s raw materials will remain robust.
Take note that China will release its Manufacturing Purchasing Managers’ Index (PMI) this Thursday. Going by recent numbers, this PMI should return a positive figure. Other than watching the AUDUSD, you can also monitor the AUDJPY. If the Chinese Manufacturing PMI comes in positive, the weakening JPY (due to Prime Minister Shinzo Abe’s monetary stimulus) should rally the AUDJPY in the short term.
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