Your Roadmap For China

Beijing's Central Business District
Frederic J Brown | AFP | Getty Images
Beijing's Central Business District

Looking for a trading strategy amid a wave of Chinese economic data? You got it.

Chinese officials sure are busy this week, releasing a stream of economic reports on everything from retail sales to GDP. The strategists at Barclays Capital are expecting some disappointment, and they have come up with a way to trade that scenario.

"Our China economists expect a mixed result relative to consensus," they wrote in a note to clients. They say the report on industrial production could beat forecasts of 9.8 percent, but they expect GDP to come in below the consensus expectation of 7.7 percent. "However," they say, "our analysis suggests that negative surprise from GDP would outweigh small positive surprise from IP," and that would hurt the Australian dollar.

You could just sell the Aussie on that forecast. But the BarCap strategists are adding a wrinkle: Australia is set to release a new employment report on Thursday, and the firm's economists think it could be stronger than expected.

"If our forecast is correct, it is likely short-term AUD positive, providing a better entry level to position for downside surprise from China data on Friday, in our view," the strategists say.



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