New York City, New York – (StockNewsDesk) – 11/01/2014 — An economic indicator released today suggests the Chinese economy is slowing down. According to the National Bureau of Statistics, the Purchasing Managers Index came down to a 5-month low at 50.8 compared to expectations of 51.1. Manufacturing in China is up against increasing costs and lower demand. Growth in new orders declined to 51.6 compared to expectations of 52.2. Export orders witnessed a contraction. The reading dropped below the 50 levels at 49.9 against earlier month’s reading of 50.2. The economic growth in China can be compared to the growth witnessed during the slowdown of 2008-09. Large companies managed to weather the slowdown, however, small and medium-scale factories could not cope with the rising costs and slowing economy.
Next August, China will showcase a new “Yuan-dominated” credit card. Chinese lawmakers will also open its financial markets to domestic bank card transactions. Additionally, they also said that foreign banks that fall in line with the criteria introduced by the People’s bank of China will be allowed to open their own clearing banks. This can boost the usage of the Yuan currency on a massive scale.
Yesterday, S&P 500 and Dow Jones reached an all-time high and heavy buying was seen on all counters throughout the globe. Japan’s decision to expand the stimulus measures to infuse more optimism did have a negative impact on the US Bonds though. The difference between US 10-Year Bonds and Japanese yields expanded to a three-week high. It widened to 1.88%. Japan’s 10-year bond made a one year low of 0.435%, while US 10-year yield increased to 2.33.
USD at 4-Year High
The value of the dollar has increased to a 4-year high as the Fed meeting outcome was cheered by investors. However, better than expected economic indicators, especially, Gross Domestic Product (GDP) growth played the role of a booster to the positive sentiment. Bank of Japan supporting fresh stimulus measures of 80 trillion yen added fuel in the rally. The optimism was distinctively seen as the Michigan Consumer sentiment came in 86.9 compared to 86.4 while the Chicago Purchasing index increased to 66.2 compared to 60.5.
The US Dollar index, which is usually measured against 6 major currencies, reached 4-year highs. USD/JPY increased 2.83% to 112.30 a 7 year low, while EUR/USD hit 2 year low at 1.2509, down 0.82%. GBP/USD slid 0.2% to 1.59 while USD/CHF came in 0.9642, up 0.86%. Canadian GDP grew negative 0.1% as a result of which USD/CAD rallied 1.05% to 1.13.