Aussie Traders Disappointed China Won’t Deploy Growth Bazooka

(eToro Blog) According to China’s official news source, the government has no plans to introduce large scale stimulus measures that could counter the current economic slowdown. Given Premier Wen Jiabao’s comments of last week, suggesting that the focus on growth should be greater, markets had been hopeful that Beijing would deploy measures at least equivalent (i.e. $630 billion worth) to those measures rolled out three years ago at the height of the global crisis. Analysts point out that given April’s industrial production figures that fell short of expectations, GDP data is also likely to show that the Chinese economy slowed again, and is now on track for the sixth consecutive quarterly decline. The consensus of a recently conducted survey of economists is forecasting that GDP will expand by 8.2% in 2012, which if realized would be the lowest annualized growth in this century.

According to the media report, the government will encourage private infrastructural investment through the speeding up of the approval project in the cases of major projects; likewise the government will encourage investors to invest in China’s privately-held banks The recent moves by the People’s Bank of China to lower the reserve requirement ratio was not mentioned, giving rise to speculation that the Chinese government won’t use monetary policy to further their goals. Indeed, the article specifically mentioned that achieving growth targets through the pumping in of government money was “not sustainable” and said that government agencies, ministries and departments will be responsible for introducing measures that would respectively stabilize growth.

This will be just the sort of news that Australia’s policy makers won’t want to hear as the Australian economy has a major reliance on China’s growth. Over the past several months, the Australian Dollar has steadily depreciated relative to the U.S. Dollar and will decline further if the RBA moves to lower interest rates at its next policy meeting. The AUD/USD pair is currently trading lower at 0.9766, largely a factor of just released data which showed retail sales unexpectedly and markedly lower than forecasts; sentiment on OpenBook is primarily bearish as of this writing.

Pakistan trader jesusismylord gained a 21% profit on a closed short in the pair. The trader’s entire portfolio earned a profit of 21.2% for last week and 111.7% for the month and 39.2% for the quarter. The trader has actively traded the Aussie-Dollar over the past several months, but has had greater success in the past month with a smaller 14.7% allocation which has returned 1.5%. The trader also has a near equivalent allocation to the NZD/USD pair, which has gained 10.2% over the same period. The fortunes of the Kiwi Dollar are also closely tied to China growth, and the NZD/USD pair which is currently lower at 0.7595, is well off the 52-week high of 0.8468.

OpenBook trader mave0307 suffered a 43.50% loss on a long position in the AUD/USD pair earlier. However, the trader is sitting on a short position opened on February 29th which is currently showing a 256.75% gain; that particular trade’s TP is set at $0.95. Similarly, a short position in the NZD/USD opened around the same time is showing a profit of 197.25% as of this writing.

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