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Talking Points:

• China’s fifth plenum will conclude with the government’s GDP estimate

• Plenum occurs after PBOC rate cut, weakest GDP print since 2008-9 crisis

• Markets speculate GDP prediction will give insight into PBOC policy bets

Macroeconomic events affect currency valuations. Stay updated with major releases on our calendar.

Over the next several days, Chinese political leaders will gather in Beijing for the country’s fifth plenum. The assembly is important because the members will discuss and decide upon China’s overall economic strategy for the coming five years.

Traders will be keen to see the government’s projection for economic growth. The estimate will most likely be release on October 29th, which is the day the politicians conclude their meeting. This figure will be closely watched because the health of the second largest economy in the world has a profound effect on other nations and asset classes.

What is interesting with the timing of the meeting is the recent rate cut by the PBOC and the third quarter GDP print of 6.9 percent. That figure is the lowest reading since the financial crisis, which most likely led to the central bank cutting the benchmark lending rate by 25 basis points. The financial markets have speculated the growth estimate will range from 6.5 percent to 7 percent.

Predictions have been made that if China’s plenum releases a figure towards the lower bound then the government will tolerate a slowdown in the economy. On the contrary, if the estimate is towards the upper bound, then traders may expect more stimulus from the PBOC. No matter what the growth is estimated to be, the markets should expect the decision to be volatile on risk-sensitive currencies.

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original source

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