Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
APAC FX mostly lower after China trade miss
APAC FX markets were mostly lower on Monday after Chinese trade data saw an unexpected drop in exports.
Chinese year-on-year exports fell from 8.7% in August to 2.4% in September causing markets to worry about the economic impact ahead of Friday’s September-quarter GDP numbers.
The Aussie was hit by the news with the AUD/USD down 0.3%. The Aussie was weaker in most other markets but did gain versus the Japanese yen.
The kiwi was also weaker with the NZD/USD down 0.3%.
The USD/CNH jumped 0.4% with the pair back at one-month highs.
The USD/SGD gained 0.2% after the Monetary Authority of Singapore kept policy on hold which provided support to the SGD.
UK jobs to guide BOE policy outlook
The UK labour market report is scheduled for publication today at 17:00 AEDT.
The most crucial piece of data for policymaking is likely the claimant count as usual. However, because wage growth is slowing down, the Bank of England will be paying greater attention to activity indicators in this survey and in the broader economic statistics.
In August, we anticipate a 0.3% month-over-month increase in regular pay in the private sector, which would be consistent with the average for the preceding three months.
The GBP/USD has fallen just over 3.0% from recent highs and is now at key support at 1.3000. A break below that would cause structural damage to the chart and indicate more declines until 2025.
While the British pound has been mostly weaker, the Aussie has underperformed, with AUD/GBP near three-week lows.
On the other hand, GBP/SGD has lost ~2% since its highs on July 16th of 1.7440.
Canadian inflation data in focus
At 23:30 AEDT today, the Canada CPI will be issued. While both the US and Canadian inflation rates are declining, the US is still above its target, and Canada’s CPI is below goal, driving divergence in policy.
The US economy is not yet clearly slowing down, with jobs, spending, and inflation all tracking above our forecasts.
In contrast, Canada is more clearly showing signs of slack, easing price pressures and the consumer impact of higher rates.
Nevertheless, we expect both regions to experience moderation in growth and inflation, which should ultimately mean lower rates for both regions.
From here, CAD buyers could be eager to take advantage at 1.3800, with USD/CAD is nearing the two-year highs.
In other markets, the CAD remains near one-year lows versus the Australian dollar and is trading at all-time lows versus the Singapore dollar.
Aussie lower on China trade
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 14 – 18 October
All times AEST
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
