Aussie Gains as China Trade Comes Back Swinging

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Talking Points

• Chinese trade data posted significant beats in US Dollar terms

• Imports have come storming back in what will be welcome news for Beijing

• The Aussie Dollar could have done with a bit of solace, and it took some

The Australian Dollar got a lift on Thursday after some big beats for China’s November trade data.

In US Dollar terms, exports expanded by 0.1% on the year. That was a modest enough rise in itself, but it was far better than both the 5% fall markets were looking for and the 7.3% fall seen October. Imports rose by 6.7%, hugely better than the 1.9% expected rise, and the previous month’s 1.4% fall.

Stronger imports suggest that Beijing’s efforts to boost domestic demand could be bearing considerable fruit, although of course some caution is warranted in interpreting this volatile series. These numbers leave China’s trade balance in surplus to the tune of US$46.3 billion. That’s about what the market expected but still some $3 billion below October’s level.

The Australian Dollar often finds itself in the position of liquid China proxy given Australia’s strong export links with the East Asian giant. The trade data look at face value to bode well for China’s commodity appetite, good news for Australia after a run of peaky data, including trade and growth.

Aussie bulls took AUD/USD up to 0.75080 after the numbers, from the high 0.74 level beforehand. However, the Aussie has failed to hold its gains, and seems to be vacillating between domestic factors and more international impulses at present.

Modest pickup: AUD/USD

Aussie Gains as China Trade Comes Back Swinging

Chart compiled using TradingView

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--- Written by David Cottle, DailyFX Research

original source

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