12 May 2014
Asia EM Express: China's President says slower growth is the 'new normal', Indonesia parliamentary election results announced
According to the Xinhua news agency China's President Xi Jinping said over the weekend that the country should get used to the slower pace of growth, which is the "new normal”, assuring at the same time that the "significant period of strategic opportunity" hasn't ended yet.
“We must boost our confidence, adapt to the new normal condition based on the characteristics of China’s economic growth in the current phase and stay cool-minded,” Xi Jinping said.
China's Premier Li Keqiang, who also spoke during the weekend, suggested that China’s substantial foreign exchange reserves, the world's largest, have become a “big burden” and could affect inflation.
"From China's perspective, macroeconomic controls could face tremendous pressures if the overall trade is imbalanced," Li warned.
Meanwhile in Indonesia the official results of Parliamentary elections were announced just before midnight on Friday. As expected, Jakarta Governor Joko Widodo's Democratic Party of Struggle, or PDI-P, won with a 18.95% support. It is not enough however (below the 25% threshold) for the party to be able to name its presidential candidate.
Nomura Research Analysts Euben Paracuelles and Lavanya Venkateswaran believe however that the PDI-P “should be able to officially nominate Jakarta Governor Joko Widodo (Jokowi) as their presidential candidate” as they probably have “already secured the support of smaller parties like Nasdem and possibly PKB.”
“We reiterate our baseline view that Jokowi will likely become Indonesia‟s next president but Parliament will more fragmented than the current one,” the analysts add. “This, and Jokowi's lack of experience on the national stage, does not bode well for reform prospects.”
Economic data
India's Trade Deficit data released by the Ministry of Commerce and Industry on Friday showed a narrowing of the $10.51B surplus seen in March to a $10.09B surplus in April. Indian FX reserves grew to $311.86B from $309.91B.
According to Nomura Research Analysts Sonal Varma and Aman Mohunta: “We expect the current account deficit to remain within sustainable levels of 1.7% of GDP in FY15 with an overall balance of payment surplus of around USD25B, leaving ample scope for the RBI to accumulate FX
reserves.”
“In line with this view, our Asia FX strategists forecast USD/INR at 59.5 by the end-2014 and 57.5 by end-2015.”
On Monday Malaysia informed that in March Industrial Production grew 4.3% on an annual basis, down from the 6.7% increase the previous month and above consensus of 4.1% rise.
Technicals
The Chinese yuan dropped on Monday following the PBoC's decision to fix the currency's midpoint at the lowest level in eight months of 6.1625, down 0.07% from Friday's 6.1581. At the moment of writing USD/CNY was up 0.14% at 6.2359.
On Friday the USD/CNY daily FXStreet Trend Index was slightly bearish, with the OB/OS Index neutral. RSI was at 50 at the last close, and has climbed to 65 so far today. Daily 2-StDev Volatility Bandwidth was shrinking at 148 pips, with ATR (14) expanding at 108 pips. The 1D 200 SMA was at 6.1203, while the 1D 20 EMA was at 6.2339.
The Indonesian rupiah was little changed on Monday at 11526 against the dollar.
On Friday the USD/IDR daily FXStreet Trend Index was slightly bearish, with the OB/OS Index neutral. RSI was at 52 at the last close, and has fallen to 45 so far today. The 1D 200 SMA was at 11,548.01, while the 1D 20 EMA was at 11,519.86.
“We must boost our confidence, adapt to the new normal condition based on the characteristics of China’s economic growth in the current phase and stay cool-minded,” Xi Jinping said.
China's Premier Li Keqiang, who also spoke during the weekend, suggested that China’s substantial foreign exchange reserves, the world's largest, have become a “big burden” and could affect inflation.
"From China's perspective, macroeconomic controls could face tremendous pressures if the overall trade is imbalanced," Li warned.
Meanwhile in Indonesia the official results of Parliamentary elections were announced just before midnight on Friday. As expected, Jakarta Governor Joko Widodo's Democratic Party of Struggle, or PDI-P, won with a 18.95% support. It is not enough however (below the 25% threshold) for the party to be able to name its presidential candidate.
Nomura Research Analysts Euben Paracuelles and Lavanya Venkateswaran believe however that the PDI-P “should be able to officially nominate Jakarta Governor Joko Widodo (Jokowi) as their presidential candidate” as they probably have “already secured the support of smaller parties like Nasdem and possibly PKB.”
“We reiterate our baseline view that Jokowi will likely become Indonesia‟s next president but Parliament will more fragmented than the current one,” the analysts add. “This, and Jokowi's lack of experience on the national stage, does not bode well for reform prospects.”
Economic data
India's Trade Deficit data released by the Ministry of Commerce and Industry on Friday showed a narrowing of the $10.51B surplus seen in March to a $10.09B surplus in April. Indian FX reserves grew to $311.86B from $309.91B.
According to Nomura Research Analysts Sonal Varma and Aman Mohunta: “We expect the current account deficit to remain within sustainable levels of 1.7% of GDP in FY15 with an overall balance of payment surplus of around USD25B, leaving ample scope for the RBI to accumulate FX
reserves.”
“In line with this view, our Asia FX strategists forecast USD/INR at 59.5 by the end-2014 and 57.5 by end-2015.”
On Monday Malaysia informed that in March Industrial Production grew 4.3% on an annual basis, down from the 6.7% increase the previous month and above consensus of 4.1% rise.
Technicals
The Chinese yuan dropped on Monday following the PBoC's decision to fix the currency's midpoint at the lowest level in eight months of 6.1625, down 0.07% from Friday's 6.1581. At the moment of writing USD/CNY was up 0.14% at 6.2359.
On Friday the USD/CNY daily FXStreet Trend Index was slightly bearish, with the OB/OS Index neutral. RSI was at 50 at the last close, and has climbed to 65 so far today. Daily 2-StDev Volatility Bandwidth was shrinking at 148 pips, with ATR (14) expanding at 108 pips. The 1D 200 SMA was at 6.1203, while the 1D 20 EMA was at 6.2339.
The Indonesian rupiah was little changed on Monday at 11526 against the dollar.
On Friday the USD/IDR daily FXStreet Trend Index was slightly bearish, with the OB/OS Index neutral. RSI was at 52 at the last close, and has fallen to 45 so far today. The 1D 200 SMA was at 11,548.01, while the 1D 20 EMA was at 11,519.86.