Aussie retreats as China import growth stops

 

Imports decline first time in two years

In data released today, China’s imports fell 7.6% y/y in December, the first monthly decline since October 2016. Exports also contracted but by a lesser degree, falling 4.4% y/y resulting in a wider trade surplus of $57.06 billion from $44.71 billion in November. AUD/USD declined following the data, dropping to an intra-day low of 0.7179.

 

AUD/USD Hourly Chart

Source: OANDA fxTrade

 

For the full year 2018, exports climbed 9.9% y/y, the highest since 2011,versus 7.9% in 2017 while import growth dipped marginally to +15.8% y/y from +15.9%. The overall trade surplus for the year narrowed to $351.8 billion, the lowest since 2013, from $422.5 billion. The surplus with the US painted a different picture. It gained 5.7% compared with a year previously, to hit $323.5 billion, the highest on record going back to 2006.

 

OANDA Trading : Have we reached peak short term market optimism

 

USD/Yuan fixed at lowest since July

The Peoples Bank of China set this morning’s USD/Yuan fix at 6.7560, the lowest since July 19, reflecting a broadly weaker US dollar on Friday. It’s worth noting that on Friday that a local press article suggested that the central bank was wary of any “sharp” yuan appreciation.

In its open market operations this morning, the PBOC injected 20 billion yuan in 28-day repos, the first liquidity injection in that tenor since June 2018. There is probably no policy implications in this move, it’s just to cover the Lunar New year period when cash demand is exceptionally high.

USD/CNH edged down to below 6.75 again, the second time in two sessions, though failed to take out Friday’s low of 6.7372, which was the lowest since July 19. USD/CNH is now at 6.7605.

 

USD/CNH Daily Chart

Source: OANDA fxTrade

 

Brexit debate to stir Europe?

The only event of note to occupy European traders will be the parliamentary debate on the Brexit deal prior to the vote tomorrow. Most analysts agree that the deal as it stands will no pass and confuse the already murky waters ahead of the final March deadline.  The pound traded defensively in Asia, struggling to test the 100-day moving average at 1.2892 to trade at 1.2845.

The only data point scheduled is the release of Euro-zone industrial production for November. Given that the numbers for Germany, France and Spain have already come out on the weak side, assumptions are that the amalgamated number will follow suit. Forecasts suggest a contraction of 1.0% m/m and 1.4% y/y. These forecasts could prove to be optimistic.

The full MarketPulse data calendar can be viewed at https://www.marketpulse.com/economic-events/

 

 

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Andrew Robinson

Andrew Robinson

Senior Market Analyst at MarketPulse
A seasoned professional with more than 30 years’ experience in foreign exchange, interest rates and commodities, Andrew Robinson is a senior market analyst with OANDA, responsible for providing timely and relevant market commentary and live market analysis throughout the Asia-Pacific region. Having previously worked in Europe, since moving to Singapore he worked with several leading institutions including Bloomberg, Saxo Capital Markets and Informa Global Markets, proving FX strategies based on a combination of technical and fundamental analysis as well as market flow information. Andrew began his career as an FX dealer with NatWest and the Royal Bank of Scotland in the UK.
Andrew Robinson

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