China Trade Data Casts a Bigger Shadow on the Chinese Economy

Highlights

• While investors continued to respond to the overnight US CPI Report, the Asian economic calendar drew interest this morning.
• China trade data delivered another gloomy picture of the Chinese economy.
• The latest report from China will pressure Beijing to deliver a meaningful stimulus package.

It was a relatively busy start to the day on the Asian economic calendar. Electronic card retail sales and Business PMI numbers from New Zealand drew interest in the early hours.

A mixed set of numbers had a limited impact on the Asian markets. However, economic data from China moved the dial, with trade data for June in focus.

The China USD trade surplus widened from $65.81 billion to $70.62 billion in June. However, the trade surplus widened because of a slide in imports. Exports fell by 6.8%, year-over-year, versus 4.5% in May, while imports tumbled by 12.4% versus 7.5% in May. Economists forecast exports to fall by 4% and imports by 9.5%.

It was another grim set of numbers from China, reflecting global trade terms. Market reaction to the numbers will likely be less significant than usual, with investors expecting Beijing to deliver a stimulus package to support the economy.

AUD/USD Reaction to China Trade Report

Ahead of the China trade figures, the AUD/USD fell to an early low of $0.67822 before rising to a pre-stat high of $0.68145.

However, in response to the trade data, the AUD/USD rose to a post-stat high of $0.68126 before falling to a low of $0.68074.

This morning, the Aussie dollar was up 0.36% to $0.68118.

Next Up

It is a relatively busy day ahead on the European economic calendar. Eurozone industrial production numbers for May will draw interest. The jury is out on whether the euro area can avoid a deep ECB-fueled recession. An unexpected fall in production would question the ECB’s hawkish policy outlook.

Other economic indicators include finalized inflation numbers from France. However, the inflation figures should not impact the global financial markets.

However, the ECB monetary policy meeting minutes and central bank commentary will draw interest. The ECB will release the monetary policy meeting minutes, with ECB President Christine Lagarde and Mr. Fabio Panetta attending the Eurogroup meeting in Brussels.

The US Session

It is a relatively busy day on the US economic calendar. After the US CPI Report, the focus will turn to wholesale inflation numbers that could further influence Fed policy expectations. Other stats include the weekly jobless claims figures that would need to spike to draw interest.