China’s passenger car sales rose 59.3% y/y in August, a marked improvement from the 15.4% y/y rise seen in July.

• Chinese economic growth to slow, but no double dip
• Inflationary pressure has eased
• New bank lending in 2010 will be within 7.5 trln yuan if maintains June level
• Yuan reform to help keep exchange rate stable

Up from previous estimate of 11%.

They ain’t silly.

• Faces many economic uncertainties
• Has a serious task to manage inflationary expectations
• Will continue to implement exisiting policies in H2
• Will maintain reasonable money, credit growth
• Will firmly curb overly fast property price rises in some regions

EUR/USD is down at 1.2260 from a North American close Monday up around 1.2275, with EUR/JPY down at 109.00 from around 109.70.  There has been an uptick in risk aversion with Asian stocks trading lower, while oil is off close to three quarters of a buck.

Worries concerning a slowdown in the Chinese economy have been exacerbated by the Conference Board correcting its’ April gauge for the outlook of China’s economy.

Not much at all in way of euro zone data today:

06:45 GMT: French consumer confidence for June expected -39 from previous -38

09:00 GMT: Euro zone consumer confidence for June (final) expected -17

Talk of sell stops now just below 1.2250.

European stocks seen opening lower this morning, FTSE down around 1%, DAX  around 0.8%.

Dow Jones piece. Westpac recommending selling AUD/USD in high .8700’s/low. 8800’s region, “represents good risk reward at start of Q3.”

Downside target .8400, stop just above .8900, which covers 61.8% retracement level of the high .9300 to .8000 downside move.

Westpac say “market is not recognising the potential for a further slowing in Chinese data momentum over the next month.”

• Yuan reform will not cause big capital inflows or outflows
• Reform has limited impact on interest rate decisions

That’s probably gradual with a capital G.

Might not be a seperate issue of discussion, but it’ll sure get discussed alot. 

I was earlier reading a comment by Goldman’s Jim O’Neil who has opined that the move to relax yuan’s peg to dollar “Is bullish for risky assets. China has become more optimistic about growth and doesn’t see the euro zone debt crisis having a material effect.”

All I can say is I hope the Chinese are right regarding the euro zone debt crisis.

EUR/USD steady around 1.2450.

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