Concerns about Slowdown in Chinese Economy Boosts U.S. Dollar
The U.S. Dollar is trading higher against a basket of currencies as traders seem to have taken risk out of the equation. Earlier in the week, China announced measures to tighten up bank lending requirements. This is raising concerns that China’s economy may slowdown, thus decreasing demand for commodities and other higher risk assets.
Today’s U.S. economic reports will highlight inflation and production. The Consumer Price Index is expected to show little growth with guesses ranging from 0% to 0.1%. Industrial Production is expected to increase by 0.6% to 71.9%
Although these reports are expected to produce knee-jerk reactions in the Forex markets today, the primary focus will be on risk sentiment. This week’s move by China is telling the market that interest rates will be rising and the government is getting ready to slowdown, if not end, its stimulus measures.
