China’s Q3 GDP expanded by 4.5% year-over-year, surpassing market forecasts of 4.4%. In September, both retail sales and industrial production in China exhibited growth that surpassed expectations. The CME FedWatch Tool indicates that traders are pricing in almost an 84% probability that the Federal Reserve will maintain current interest rates this month. AUD/USD extends its gains for the second successive day, trading around 0.6970 during Asian hours on Monday.
The pair remains robust as the Australian Dollar holds its position following the release of significant economic data from China, a key trading partner of Australia. China’s economy expanded at a faster pace than anticipated in the third quarter, with Gross Domestic Product increasing by 4.5% year-over-year. This signifies a notable increase from the 4.3% growth observed in the second quarter, surpassing the market consensus forecast of 4.4%. In the third quarter, the Chinese economy demonstrated a quarter-over-quarter growth of 1.2%, marking an acceleration from the 0.9% observed in the second quarter and surpassing the anticipated figure of 1.1%.
The stronger-than-anticipated economic performance was additionally bolstered by solid activity data for September. Chinese Retail Sales rose by 1.1% year-over-year, notably exceeding the 0.5% growth anticipated by analysts and marking an acceleration from the 0.4% recorded in August. Industrial production exhibited an upward trajectory, increasing by 5.5% year-over-year in September, surpassing the forecast of 5.4% and the prior month’s figure of 5.2%. The AUD/USD pair gains ground as the US Dollar struggles under fading expectations for a Federal Reserve rate hike in October.
Market sentiment experienced a notable shift following remarks made by Fed Chairman Kevin Warsh at an International Monetary Fund event on Friday. He indicated that he refrains from prejudging interest-rate decisions and did not provide a definitive signal regarding the central bank’s intentions for short-term rates at the forthcoming meeting scheduled for October 27-28. Market expectations for a rate increase have diminished considerably. According to the CME FedWatch Tool, traders are currently assigning an approximately 83.9% probability to the Fed maintaining interest rates at their current level later this month, a significant increase from the 49% probability reflected just a month prior.
