China trade falls faster than expected
A sharp miss in Chinese trade numbers hit markets across the globe yesterday with exports falling by a massive 14.5% in the twelve months to July.
The slowdown in exports was the quickest pace since the start of the pandemic in early 2020 and provides further evidence on how the slump in manufacturing demand is impacting two of the globe’s most important economies – China and Germany. Imports also saw a big drop – down 12.4% in annual terms versus the 5.0% fall expected – in a sign that future activity is also likely to be sluggish.
Aussie hits two-month lows
The Australian dollar was weaker after the China news with the AUD/USD down 0.4%.
The AUD/USD dipped to two-month lows and neared key support at 0.6450 before rebounding.
The NZD/USD was lower too, falling 0.7%, with the kiwi also pressured as US bond yields remained elevated.
The Chinese yuan, which had already started the session lower after the People’s Bank of China set a weaker-than-forecast CNY fix, fell sharply after the trade data, with the USD/CNY back above the key 7.2000 level.
China, NZ inflation in focus
Inflation numbers will be closely scrutinised over the next 48 hours with key releases due from China, New Zealand and the US.
As per most recent Chinese data, inflation numbers have recently fallen off a cliff, with consumer prices flat in annual terms last month, while producer prices were down 5.4%.
In New Zealand, consumer inflation expectation data is due today, with two-year forecasts recently falling from 3.60% to 2.79%.
Of course, the big release is out of the US, with Thursday night’s July CPI number critical for the Federal Reserve’s next move – and the USD.
Aussie hit by China trade slowdown
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 7 – 11 August
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.
