China's GDP growth released today (20th Jan 11') exceed expectations. What does this mean for traders?

The Chinese GDP growth for the past quarter was at 9.8% exceeding expectations of 9.4%. While on the one hand this may look like a positive sign for the world economy and especially traders, people are factoring in expectations from the Chinese government to cool down this rapid growth to prevent asset bubbles.

Last months CPI (inflation) figures came out higher than expected, which added pressure to the Bank of China to tighten monetary policy. Today's GDP figures would add more pressure to the BoC to revise it's policy. Last year the BoC increased banks' reserve rates three times, indicating it is trying to cool down its growth and rising asset prices.

Hence, instead of looking at this as a positive news, traders look into the future and price this into their trades as we are seeing now. After the figure was released, all major currencies rallied against the USD, however, a few minutes later, the USD came back into favor amid fears of future monetary policy tightening by the Chinese Authorities.

And which asset class would be affected the most? AUD, CAD, oil, iron ore, and other risky assets.

Hope you enjoyed it! and Happy Investing!