In China, the Communist Party of China officially ended its 18th National Congress. The elected Central committee is expected to host a meeting on November 15 to decide on members for the Standing Committee and the Politburo. Many people expect that the Standing Committee will be reduced to a mere seven members from its previous total of nine.
Despite the political handover in China, many analysts expect that it will take up to a year for new leaders to develop a consensus and a level of authority over the population. Structural reforms are ultimately expected to pick up pace in 2014. For the present, monetary policies are not expected to change drastically within the world’s second-largest economy.
In December, market participants should look out for the Central Economic Working Conference. This conference will ultimately decide the targets for gross domestic product growth in 2013. Many analysts around the world believe that China will keep its targets at 7.5 percent. Under certain circumstances, the Chinese government may drop their GDP growth target to just seven percent.
Euro Near Lows
On Wednesday, Europe’s currency remained near two-month lows. Investors are still wary about investing in the euro due to weakened economic data from Germany as well as uncertainty over the Greek bailout. The euro rose 0.2 percent during the day to hit $1.2722 versus the United States dollar. It is not significantly off of a two-month trough of $1.2661 that it hit on Tuesday. The drop in the euro on Tuesday was fueled by sentiment surrounding the weak German ZEW survey. Support for the euro is still seen at a 90-day moving average of $1.2667. If it breaks this level, investors could see a 50 percent retracement of its rally since July of this year.
The biggest issue harming growth in the euro is the debt crisis in Greece. Greece’s two main creditors, the European Central Bank and the International Monetary Fund, still cannot agree on a debt target for the Eurozone nation. The International Monetary Fund has been pushing in recent days for the Eurozone to assume more of Greece’s debt. On November 20, members of the Eurozone are expected to meet and discuss further negotiations.
On Wednesday, the euro rose 0.3 percent versus the Japanese yen to reach a level of 101.14 yen. Previously, the yen reached a one-month low of 100.33 yen.
The dollar index almost reached a two-month peak of 81.241 on Tuesday. On Wednesday, the greenback managed to continue its gain versus a basket of major currencies. In rough times, investors often view the United States dollar as a safe haven investment. Versus the Japanese yen, the greenback hovered around 79.51 yen. This marks a 0.2 percent gain since Thursday night’s trading session in the United States.