forex trading outlook today - China yen forecast 2012 : Over the past few years China has proved to be an engine for growth, counterbalancing some of the recessionary shocks in the Western world. However, similarly to Japan in the late-1980s, there are signs that the incredible double-digit growth is starting to slow.
In November the manufacturing sector in China contracted as the country started to feel the economic chill from the eurozone. On top of this, there have been some worrying signs of a house price bubble. This will have a serious impact on confidence levels, as the Chinese population has become accustomed to an ever-rising housing market.
As we enter 2012 China faces the risk of slowing growth, perhaps 8-8.5% rather than 10% or more, and lower interest rates to stimulate a flagging housing market. We have seen China’s trading partners cut rates already; Australia, for example, recently cut rates by another 25bps to 4.25% in order to try to accommodate slowing growth.
We believe USD/CNY (Chinese renminbi) will test the psychological 6.00 level by the end of 2012 is now on the cards.
In November the manufacturing sector in China contracted as the country started to feel the economic chill from the eurozone. On top of this, there have been some worrying signs of a house price bubble. This will have a serious impact on confidence levels, as the Chinese population has become accustomed to an ever-rising housing market.
As we enter 2012 China faces the risk of slowing growth, perhaps 8-8.5% rather than 10% or more, and lower interest rates to stimulate a flagging housing market. We have seen China’s trading partners cut rates already; Australia, for example, recently cut rates by another 25bps to 4.25% in order to try to accommodate slowing growth.
We believe USD/CNY (Chinese renminbi) will test the psychological 6.00 level by the end of 2012 is now on the cards.
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