Biggest contraction since 2016
China’s imports in May declined 8.5% from a year earlier, the biggest shrinkage since July 2016, in further evidence that the US-China tariff conflict is taking a heavier toll on the economy. Exports for the month came in better than expected, rising 1.1% y/y versus expectations of a 3.8% fall. As a result of the lower imports, the trade surplus for the month rose to $41.65 billion from $13.83 billion in April.
The weak imports numbers had an adverse impact on the Australian dollar, which fell 0.44% from intra-day highs above 0.7000 to 0.6979 versus the US dollar. The FX pair has once more failed to break above the 55-day moving average at 0.7027, which has capped prices since April 23. The Aussie also gave back early gains to 76.04 versus the Japanese yen to steady at 75.74, almost unchanged on the day.
AUD/USD Daily Chart
Trump suspends Mexico tariffs
The trading day had started quite positively after US President Trump announced late Friday that he would suspend the progressive tariffs on Mexican imports scheduled to be imposed today, as Mexico had promised to take a tougher stance on immigration. Stock indices were all trading in positive territory (including China and Hong Kong stocks, which were playing catch-up after a holiday on Friday) while the yen was weakening as safe haven positions were unwound. USD/JPY rose for the first time in three days, maintaining its hold above the 61.8% Fibonacci retracement level of the January-April rally at 107.715.
USD/JPY Daily Chart
UK numbers fill the data slate
A slew of UK manufacturing and trade data populate the data calendar today, kicking off with the manufacturing and industrial production numbers for April. Industrial production is seen rising 0.1% m/m following a 0.7% gain in March, while manufacturing production is expected to slow to +0.2% from +0.9% the previous month. The goods trade balance for that month is seen widening slightly to GBP13.8 billion from GBP13.65 billion. Note that the first round of the UK Conservative Party process to choose a new leader begin today. The Euro-zone Sentix investor confidence index is forecast to tumble to 1.4 in June from 5.3 in May.
The North American calendar features Canada’s building permits for April and housing starts for May,along with the JOLTS job openings for April. A speech from Bank of England’s Saunders completes the day.
The full MarketPulse data calendar can be viewed at https://www.marketpulse.com/economic-events/ 
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