Fitch Retains China's 'A+' Rating
Fitch Ratings maintained China's sovereign ratings and 'stable' outlook
on Friday, citing strong external balance sheet and the less volatile
Fitch affirmed China's long-term foreign and local currency Issuer
Default Ratings at 'A+'. The 'stable' outlook reflects Fitch's view that
upside and downside risks to the rating are balanced.
The sovereign external balance sheet is China's core sovereign credit
strength. China's foreign reserves rose to $3.82 trillion at end-2013.
This was equal to 19.2 months of current external payments.
China's growth model faces tightening constraints from the rapidly
increasing burden of leverage in the economy and from the deteriorating
ability of the economy to absorb additional investment profitably.
According to Fitch, China's GDP growth would remain less volatile out to
2015 than the 'A' range median in Fitch's projections. However, the
re-balancing process entails some risk of sharply higher volatility if
things go less smoothly than Fitch expects.
Further, Fitch estimates the level of aggregate financing in China's
economy at 217 percent of GDP at end-2013, up from 198 percent at
end-2012. The authorities acted more aggressively to contain risks to
financial stability since mid-2013.
However, fundamental credit weaknesses, including low average incomes
and weak scores for governance, weigh on the credit profile relative to
'A' range peers.
2014-04-04 12:30 GMT (or 14:30 MQ MT5 time) | [USD - Non-Farm Employment Change]
if actual > forecast = good for currency (for USD in our case)
2014-04-04 12:30 GMT (or 14:30 MQ MT5 time) | [CAD - Employment Change]
if actual > forecast = good for currency (for CAD in our case)
What Does The Future Hold For Gold? (based on forexminute article)
Traditionally, the value of gold fluctuates with market sentiment. In
times of military or geopolitical unrest, traders and investors buy gold
and sell the more risky currencies to seek refuge in the safe haven
asset. Conversely, when all is well in the markets and traders' and
investors' perception of a nation's economic outlook is positive, gold
generally depreciates versus the more risky assets.
The yellow metal has gained strength for the majority of the year,
sustaining a considerable uptrend, likely fuelled by the ongoing
situation in Crimea, gold topped out at 1,392.00 on March 17. Since
then, the XAUUSD has traded to two month lows at 1.277.26, and now sits
slightly higher at 1,299.44. A number of fundamental factors will likely
decide the medium term outlook for the price of the precious metal.
The first is the aforementioned situation in Crimea. The tension looks
to have reduced, as Putin withdrew troops from the Ukrainian border, and
the markets look to have responded accordingly. However, the sanctions
on Putin's Russia remain, and are set to be tightened for as long as
Russia lays claim to Ukraine. At some point, one or the other parties
will have to compromise, something that, at present, neither seems
willing to do.
The second is the potential for a slowdown in China. As disappointing
economic data continues to pour out of the Asian superpower, global
markets become increasingly concerned of the ripple effect such a
slowdown might create. China has large levels of foreign investment
across a huge number of industries worldwide, and a slowdown would stem
capital flow to these investments. This could switch sentiment, and
drive up the price of gold.
Finally, Janet Yellen recently hinted at an interest rate hike. This
would, in the medium term at least, afford US dollar safe haven status.
Such an event would likely redirect the capital of risk averse investors
from gold to the US dollar, and in turn, drive down the price of the
China’s Foreign Exchange Watchdog Expects Country to Hit Current Account Surplus
The Chinese foreign exchange regulator announced on Friday that the
nation’s current account will most likely remain in surplus in 2014;
while it expects more capital outflows and inflows into the economy as
Beijing moves in to implement its exchange rate reforms.
China’s current account, its widest gauge of trade with its partners
such as U.S., hit a surplus totalling $182.8 billion in 2013, a decline
of 15 percent from a year ago, according to the State Administration of
Foreign Exchange in a statement posted on its website.
The surplus equals 2 percent of the country’s gross domestic product, a
decline of 0.6 percent from a year ago, reported SAFE, according to Wall Street Journal.
The surplus in 2014 will likely be a major contributor, while surplus as
a proportion of the GDP will remain at low levels, said SAFE. China’s
trade surplus measured $259.8 billion in 2013.
SAFE announced that it will shift its focus towards minimizing risks
from cross-border capital movements this year, and two-way capital flows
will possibly rise as the yuan rate slowly edges towards the
government considers an equilibrium level.
The financial and capital account, which incorporates investment, reached a surplus of $326.2 billion in 2013.
A separate statement issued on Friday showed that the regulator had
revised slightly upwards the forecasts of the China’s current account
surplus in the fourth quarter of 2013 to 44.0 billion from a surplus of
In the fourth quarter the revised forecast of financial account and
capital totalled a surplus of $127.0 billion, up from a prediction of
EURUSD Fundamentals (based on dailyfx article)
GOLD Fundamentals (based on dailyfx article)
USDJPY Fundamentals (based on dailyfx article)
USD/JPY at Top of Near Term Channel; Caution Warranted
GBPUSD Fundamentals (based on dailyfx article)