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Australian Dollar Surges as China Trade Smashes Forecasts

2/10/2017, 3:41:45 PMBasics of Trading
Australian Dollar Surges as China Trade Smashes Forecasts

Talking Points:

  • The Australian Dollar got a boost  following some consensus smashing Chinese trade data

  • The thesis that China is now not just stabilizing but picking up steam is very much intact

  • Imports suggest rising internal demand

The Australian Dollar jumped on Friday following a blockbuster set of Chinese trade data for January.

Exports leaped 7.9% in US Dollar terms, smashing estimates of a 3.3% rise and more than erasing the grim memory of December’s 6.1% slide. Imports rose 16.7%, again hugely ahead of forecasts and suggesting that internal demand remains robust.

The data was even punchier in Yuan termshowever. Exports rose 15.9% on-year. This was a massive beat of the 5.9% rise expected and will be read as a major positive for the Chinese economy. Imports surge

d 25.2%, a full ten percentage points above average forecasts. The overall USD-terms trade balance was $51.35 billion. That too was well above expectations ($48.85 billion) but still some way below October’s peak of $61.29 billion.

Still, these are strong numbers which ought to bode well for China and proxy assets such as the Australian Dollar. Sure enough they did, at least in the Aussie’s case, with AUD/USD rising to 0.76569 after the numbers from 0.76386 just before their release.

A spring in its step: AUD/USD

Australian Dollar Surges as China Trade Smashes Forecasts

Earlier in the session the Australian Dollar had all-but shrugged at the release of a “something for everyone” Statement on Monetary Policy from the Reserve Bank of Australia. It trimmed near-term growth forecasts but left some pretty upbeat medium-term calls intact, doing nothing to alter the markets’ essential prognosis that while Australian interest rates need go no lower, they may not rise soon either.

UBANK FX provides forex news and technical analysis on the trends that influence the global currency markets.