- Pakistan Rupee (PKR) trends lower in risk off trade
- Chinese GDP beat forecasts but retail sales missed forecasts
- US Dollar (USD) advances across the board
- Concerns rise over the impact of resurging covid on the economy
The US Dollar Pakistan Rupee (USD/PKR) exchange rate is extending gains on Monday. The pair advanced 0.1% across the previous week closing on Friday at 160.10. At 10:15 UTC, USD/PKR trades +0.3% at 160.65.
Risk appetite is declining at the start of the new week as investors look past encouraging Chinese GDP data, focusing on rising covid concerns.
Fourth quarter Chinese GDP showed that the world’s second largest economy grew by 6.5% at the end of 2020. This was the fastest level of growth recorded for 2 years and was also slightly ahead of analysts expectations. As a result, Chinese GDP advanced 2.3% across 2020 making it the only major economy across the globe to avoid contraction last year.
Despite the strong GDP data, weaker than forecast Chinese retail sales figures unnerved investors. Retail sales missed forecasts growing by 4.6% in December, below 5.5% forecast and a deceleration on the previous month.
The US Dollar is edging higher versus the Pakistan Rupee and versus its major peers on Monday. The US Dollar Index which measures the greenback versus 6 major peers trades +0.1% at 90.89.
Demand for the US Dollar is rising as investors seek out its safe haven properties amid growing concerns over the economic recovery whilst covid cases continue to surge.
Friday’s core retail sales released showed a contraction of -1.4% month on month in December, a significantly larger decline than forecast. The figures suggest that consumer spending in the world’s largest economy was being knocked by the strong resurgences in covid cases.
Looking ahead, this week sees the inauguration of President Joe Biden at the 46th President of America. Whilst the event is expected to be more ceremonious than market moving, there are some concerns about possible violence at the event on Wednesday.
Today, US equity markets are closed for Martin Luther King Day so the trading range could be limited.