Chinese Home Price Growth Slows Modestly

Daily Analysis - 22/02/2017

Chinese Residential Property Price Gains Slowly Fade

chinese-home-price


Increased property curbs and measures designed to limit speculation in residential housing are beginning to bear fruits as evidenced by the latest Chinese housing figures which showed both monthly and annualized price increases decelerating slightly.

Chinese Home Prices


After recording blistering growth in housing prices over the last few months, exceptional moves undertaken by the People’s Bank of China and the Central Government to cool momentum are showing signs of success.  According to figures compiled by the National Bureau of Statistics, Chinese residential real estate prices have now risen for 16-straight months, rising 12.20% year over year through the end of January.

After printing at a 12.60% annualized pace of growth back in November, the latest figures indicate that property curbs are working after prices only rose by 0.20% month over month.  Although prices rose in the majority of cities measured, increased restrictions implemented by local governments are clearly having an impact and will likely lead to a further deceleration in price gains.  In the meantime, the Yuan continues to give back ground versus the US dollar, with USDCNH touching a one-week high on Tuesday.

popup_close
1-usdcnhdaily02222017

Bank of England Governor Carney Upbeat on Outlook


In spite of his concerns heading into last summer’s referendum vote, Bank of England Governor Mark Carney outlined more optimistic scenarios for the United Kingdom during his latest remarks to the Treasury Select Committee.  Although he emphasized that there was a scenario in which the Central Bank would be willing to raise interest rates in line with improving economic fundamentals, he stressed that it is highly dependent on how the exit negotiations unfold.

During his comments, he also stressed how accommodative action in the form of a rate cut and expanded quantitative easing had helped ease lending conditions while bolstering business activity and confidence.  However, Members of Parliament expressed their concerns about the impact of a low rate environment while focusing on the Central Bank’s recently updated metrics for equilibrium unemployment.  After climbing on Tuesday, GBPUSD is extending gains in early European trade.

popup_close
2-gbpusddaily02222017

Pace of US PMI Expansion Tapers During February


Stocks shook off weaker fundamentals on Wednesday following disappointing preliminary figures pertaining to US factory and services activity during the month of February.  According to Markit Economics, the advance reading of the US Manufacturing Purchasing Managers’ Index came in 54.3, below estimates of 55.3 and the January figure of 55.0.

Although still in expansionary territory, the figures were a marked retreat from the highest point in nearly two years as weaker output and slowing new order growth weighed on the figure.  Services also disappointed forecasts of 55.8, coming in at 53.9 for the same period, suggesting that the post-election rally in business confidence may be nearing an end.  Nevertheless, equity benchmarks were unfazed by the development, with Nasdaq Composite closing at a new record high.

popup_close
3-nsdq-mar17daily02222017

Euro Manufacturing and Services Expansion Nears 6-Year High


In a departure from the political developments that are commanding the attention of financial market participants, Euro Area fundamentals showed sustained signs of strengthening during the latest preliminary PMI figures for the monetary union.  The most significant takeaway from the report was the upside pressure on prices for both the manufacturing and services sectors.  The rebound in inflation is already materializing for input and output costs, raising the specter of further prices gains over the coming months as the ECB targets price stability.

Advance PMI figures showed major gains in the employment components of the PMI figures, with services managing to record the fastest pace of growth in 9-years while the comparable manufacturing data displayed the second best uptick in employment creation over the last 6-years.  Even amid the optimistic business outlook, EURJPY is retreating, briefly falling below 119.000 before rebounding modestly.

popup_close
4-eurjpydaily02222017

Upcoming Events

  • Time
  • Currency
  • Event
  • Forecast
  • Previous
  • 9:00 GMT
  • EUR
  • German Ifo Business Climate Index (February)
  • 109.6
  • 109.8
  • 9:30 GMT
  • GBP
  • GDP QoQ (Q4)
  • 0.60%
  • 0.60%
  • 9:30 GMT
  • GBP
  • GDP YoY (Q4)
  • 2.20%
  • 2.20%
  • 10:00 GMT
  • EUR
  • CPI YoY (January)
  • 1.80%
  • 1.80%
  • 10:00 GMT
  • EUR
  • Core CPI YoY (January)
  • 0.90%
  • 0.90%
  • 13:30 GMT
  • CAD
  • Core Retail Sales MoM (December)
  • 0.80%
  • 0.10%

Please note that CFDs are a leveraged product and may result in the loss of your entire capital. Please ensure that you fully understand the risks involved.