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Asian Session – China industrial production disappoints; euro recovers above 1.07 dollars

Chinese industrial production data disappointed again after coming in below expectations. October industrial production rose by 5.6% year-on-year, slightly weaker than the 5.7% rate in September and below expectations of 5.8%. Along with Sunday’s poor trade data, the figures are a further sign that the Chinese economy is adjusting to a slower pace of growth. However, domestic consumption appears to be holding up as retail sales accelerated slightly to 11% in October. In other data, fixed asset investment was stable at 10.2% year-on-year, the first time since June 2014 that the annual rate hasn’t fallen.

The Australian dollar did not react much to the data and held on to most of its gains since the start of Wednesday’s Asian trading. The aussie peaked at 0.7077 against the US dollar before easing to 0.7064 in late Asian session.

The kiwi followed a similar pattern and climbed to 0.6587 against the greenback after RBNZ Governor Graeme Wheeler expressed concern over the impact of lower interest rates on the housing market in Auckland. Speaking at a press conference on the central bank’s semi-annual financial stability report, Wheeler highlighted financial risks to the New Zealand economy from the booming property prices and the rise in bad loans in the dairy sector. The New Zealand dollar gave back some of its gains though in late Asian trading to slide to 0.6563.

The euro recovered yesterday’s losses after it fell below 1.07 dollars on political uncertainty in Portugal as well as growing expectations that the European Central Bank will boost monetary stimulus in December. In Portugal, the centre-right minority government was ousted by left wing parties, which include far-left communists. This has raised fears that a new administration would push back reforms and undo some of the austerity measures of the previous government.

The single currency rose as high as 1.0773 dollars today after hitting a low of 1.0674 dollars on Tuesday but dropped to 1.0754 dollars in late Asian trading. The pound was also higher against the US currency to climb to 1.5164 dollars. The greenback eased back on Wednesday to fall slightly to 122.97 yen.

Crude oil prices continued to come under pressure after data showing US stockpiles rose last week. Prospects of weaker growth in China and Japan also weighed on prices. US oil futures attempted to reverse five straight days of losses to rise slightly to $43.67 in late Asian session.

Coming up later in the day, UK unemployment and earnings figures are expected to be the only major data of the day. US and Canadian markets are closed today for Remembrance day.

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