FXStreet (Delhi) – Analysts at Lloyds bank, note that the global risk sentiment is likely to be guided by the China’s outlook and any negative surprises in the upcoming trade data will reinforce expectations of further monetary easing from the Chinese authorities.
Key Quotes
“Global risk sentiment remained subdued over the past week despite the Chinese trading week being shortened by Victory Day celebrations, which limited the scope for a further ‘risk-off’ induced sell-off in Chinese equities.”
“Although the ECB provided itself with more flexibility to deliver additional QE should conditions warrant and amidst a further scaling back in US Fed rate hike expectations, lingering concerns over the health of China’s economy and more widely global growth prospects continued to be reflected in broad-based weakness in global stock markets, in particular across Asia.”
“With these concerns set to dominate over the coming week, fears remain elevated of a renewed slide in Chinese equities. Ongoing concerns over Chinese growth are likely to be highlighted by the August trade report.”
“While the impact of the recent devaluation on Chinese exports is too soon to be reflected in the upcoming trade report, should any discernible improvement be absent in future data, this would further heighten expectations for additional policy easing.”
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