China’s chief banking regulator, Liu Mingkang, announced that some banks were asked to curb lending after a record 9.59 trillion yuan in new loans in 2009.
The abundance of loans has been a result of Chinese stimulus and has helped to fuel a recovery both in China and globally. Yet concerns over too rapid growth have led China to take steps to slow it down. This is a necessary step for China to be able to sustain their progress. However, this is cause for concern for the rest of the world, as their growth may halt or become less than desirable as a result.
China will also be reporting its GDP data tomorrow. Expectations are for double digit growth, which will highlight the need to restrict unsustainable expansion.
Whether its deleveraging or risk aversion, the US dollar has made significant gains recently. Stocks have tumbled, as well as commodities. EURUSD has made a new 5 month low, breaking below 1.4100. Longer term we are bearish USD, but this is a much needed correction from USD oversold levels and is likely to continue in the short term. So in the short term we are cautiously bullish USD. In the more medium to long term, we are looking for a top of this current USD rally in order to sell USD at a higher price.
