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up she will definitely shake the world”.
This week sees a slew of Chinese economic data being released like the Chinese GDP figures and CPI data.
The question is, will Chinese data take risk off the desk or crush risk on any rally?

The Chinese central bank is likely to hold their currency flat pulling currencies like the Australian dollar, Nowergian krone, South African rand and the Canadian dollar giving them a soft landing on Chinese data.
Lately, the Chinese have been involved in currency wars with the US as their currency is considered to be undervalued by 50 per- cent.
A combination of better than expected US data and hope for Europe has driven risk aversion lower propping up risk appetite benefiting all commodity currencies.
The Canadian dollar strengthened on sentiments the G20 and the IMF will support the Europe debt crisis easing concern that a recession is imminent.

The Canadian dollar also got support from a positive US economic data improving Canada’s trade flows.
The Canadian dollar was trading at C$1,0098 per US dollar. The Aussie dollar has risen by 5,6 percent against the US dollar since August 2011 and strengthened to trade at C$1,0327 against the US dollar.
The Aussie dollar is more liquid than the New Zealand dollar and looks attractive due to better Chinese trade flows.

The New Zealand dollar fell against the US dollar from US80,34 cents to trade at US80,71 cents.
A lower risk aversion has punished all dollar and yen longs as investors increased bets on high-yielding assets and commodi- ties.
The dollar fell to 77,02 yen from 77,22 yen and was weak trading at US$1,3875 from US$1,3857 against the euro.

Policy makers are meeting this week in Europe to discuss the way forward in the region.
Bad news coming out of Europe has been weighing on the euro lately dragging down growth related currencies.
Last week saw the Group of 20 and the IMF agreeing to bolster its lending resources to help stem Europe’s debt crisis.

The Eurozone leaders may complete a debt plan at an October 23 summit to present to a gathering of G20 chiefs on November 3-4.
The markets are still skeptic about a euro rally as some traders have considered the rally as a temporary given the situation in Europe.
This could undermine growth-related currencies as they could swing between gains and losses.

On the South African market the rand reversed earlier losses against the dollar on speculation European leaders are making progress increasing bets on a rescue plan for regions debt crisis increasing demand for riskier assets.

The currency should be able to hang onto the gains as more investors are buying into this rally.
We might see this rally for about a week or so as the market begins to price in the European situation.

As long as there is a downside risk in the Eurozone that will weigh on the Rand but at the moment the bias is in favour of the Rand as risk aversion remains low.
The Rand was trading at 7,8262 against the dollar as it strengthened. The rand weakened against the euro as it traded at 10,8264 from 10,8252 per euro.
In terms of commodities gold climbed 2,9 percent to US$1 683 an ounce its biggest weekly jump.

The Federal Reserve will keep further asset purchases an option to boost the economy, with that the bullion will react the quickest to an expansion in money supply by the Fed and the only major move for gold will be a further rally.
With all the noise coming out of China on their copper levels as their stockpiles are low that could push prices up this week.

Crude oil jumped to a three week high as it rose 4,6 percent to US$87,80 a barrel on Yemen pipeline disruption as that has affected supply.
Stockpiles in Europe are low given the situation in Libya as most European countries rely on oil as part of their consumption.

• Contact Prodigy Chinanga on 077 2 753 594 or email [email protected]