Thursday, 23 February 2012

Daily Forex Brief London: Thursday 23rd February 2012

There is growing speculation that China will formally lower its growth target early next month when the National People's Congress meets in Beijing. It is China's impressive growth numbers that have always caught the headlines, together with its comparative resilience during the financial crisis. But there have always been numerous more worrying issues bubbling just below the surface, such as the environmental costs, over-investment and the fact that inequality has been growing rapidly. At the same time, wages' growth is becoming a problem, something that is difficult to see retreating given that growth in the labour force has flattened out and is likely to be declining in the coming years. There are also issues around initiating a soft and controlled landing of the property sector, not an easy task by any means. So, the magic 8% number may on the way out, but it's not going to be easy for China to balance all these competing needs and risks.

Also in today's Daily Forex Brief:
  • Yen primarily a rates story
  • Sterling hurled lower
  • The potential hit from political instability in Australia

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