USD declines and China shows muscles
The US dollar continues to lose ground against most currencies. The DXY-index, a dollar weighed towards basket of six major currencies, fell also on Tuesday from Monday’s low on 82,325. The Euro inched marginally above 1,32. USD/JPY keeps steady at 99,721. After new record highs in Asia spurred by a Chinese stock rally, Wall Street continued to new record highs on on good quarterly earnings from Dupoint and United Technology. Apple is going to present results after closing in New York.
In an upbeat statement on Tuesday the new Chinese Premier stressed that the aim of his authorities is to double the Chinese Gross Domestic Product, GDP, from 2010 to 2020, To obtain this target an economic growth of minimum 7 % annually is needed. The last forecasts for yearly growth in China in 2013 is 7,5 %. The Chinese government has introduced measures which encourage bigger competition between banks and financial lenders while simultaneously keeping inflation under control.
The Hang Seng index added 2,1 % on the announcement that China shall start huge infrastructure projects within the railway industry. These projects will consume big amounts of cement, steel and commodities and are seen by markets as a sure token that China will continue to be the same driving global force as it has been for the last years. Chinese new leadership has no ambition to give up on ambitious targets set by its predecessors. It also determined to avoid any hard landing in its economy.
The Chinese statements were positively received as were quarterly earnings results from the US and the Federal Reserve’s (FED) statement last week that monetary easing is going to continue for an unforeseeable future. Oil prices are keeping steady at USD 108 a barrel level, and gold and silver started the week with higher prices than seen in weeks. Gold took a breathier on Tuesday and stayed at USD 1336 after adding 3 % on Monday. Commodities don’t show any clear direction, but the Chinese statements should represent a clear boost for a sector being under strong pressure.
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