AUD/USD – FDI in China widely anticipated

on Aug 20, 2013
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**iNVEZZ.com, Tuesday 20 August:**

US Redbook Retail Sales for last week reported decelerating growth from the prior 0.4 percent to 0.2 percent.
The Melbourne Institute Leading Index for June m/m will be reported at 01.30 BST tomorrow. The previous announcement indicated a rise of 0.2 percent.
At 03:00 BST tomorrow the Chinese Conference Board Leading Index for July m/m will be released. The prior reading showed 1.0 percent growth.

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The Australian dollar will also want to factor in the year-to-date Foreign Direct Investment (FDI) in China due out later today or tomorrow. The data has a tentative date range as the Commerce Ministry does not have an exact release schedule. Since April 2011 Chinese FDI has been decelerating each month, reaching a drop of 7.3 percent this February. After staying in negative territory from February 2012 to March 2013, FDI in China has rebounded with three readings showing growth of slightly above 1 percent. However, the latest release indicated a 4.9 percent rise in foreign direct investment, still well below the 15 percent pace prevalent before the selloff in commodities and slowdown in emerging markets.

!fm[](/uploads/story/4959/Credit_growth_vs_investment_growth.PNG)
This scatter plot from Credit Suisse illustrates the non-financial credit growth versus the investment growth across various cases and periods. When credit considerably outpaces investment growth in the economy, a nation could be facing a deleveraging period similar to post-1980’s boom-time Japan or following the more recent bursting of the US housing bubble. The current Chinese rate of credit growth has significantly surpassed investment and analysts are hoping for a significant increase in FDI to fuel a sustainable economic revival.
At the start of the European session today the aussie found support around the 12-day low of 0.9027 and the pair is currently holding around 0.9097 or 0.18 percent lower for the day

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