Week in FX Asia – Commodities Focus On Chinese Plenum Expected Reforms

China posted encouraging results this week. Exports rose 5.6 percent beating expectations in October. Analysts had forecasted a 3.2 percent growth. Imports grew less than expected by rising 7.6 percent. Both numbers resulted in a net surplus of $31 billion in October. September’s surplus was half of that at $15.2 billion. The market took the Chinese trade data as a suggestion that global demand continues to improve.

The figures support the statements by Chinese Premier Li Keqiang that the Asian economy is on track to reach the 7.5 percent growth target in 2013. A far cry from the 10 percent pace China set in the past three decades, but a sign of the impact the global economic crisis has had on growth.

China is one of the largest consumers of commodities, so good news regarding continued growth benefit producers. China is set to become the number one consumer of gold this year, after India’s efforts to curb the metal import. Coal, steel and copper are markets where China leads both as a producer and a consumer.

The focus for the Communist party Plenum will be how to increase internal consumption to cope with the external drop in demand. Urbanization, financial reforms, ,social security, land ownership and pollution are some of the major topics that will be discussed.

WEEK AHEAD

* CNY New Yuan Loans
* GBP Consumer Price Index
* GBP Bank of England Inflation Report
* JPY Gross Domestic Product
* EUR German Gross Domestic Product
* EUR Euro-Zone Gross Domestic Product s.a.
* USD U.S. Senate Banking Committee Confirmation Hearing for Yellen
* EUR Euro-Zone Consumer Price Index

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza