When is China trade balance release and how could it affect the AUD/USD?
|China is scheduled to release May imports, exports and trade balance figure later today.
Export growth is seen slowing to an annualized rate of 1.7 percent in May following at 3.7 percent rise seen in April. Meanwhile, imports growth is also seen slowing to 8.6 percent in May from 11.6 percent in April.
So, exports are seen lagging by a big margin, hence the trade surplus is expected to have narrowed to CNY 148.309 billion in May from 182.80 billion in April.
Focus on China's trade surplus with the US
Trump has long criticized China's widening trade surplus with the US. In response, China has offered to China has offered to purchase close to $70 billion worth of US good over the next year, according to the Wall Street Journal, but has vowed to fight back if Trump still imposes tariffs on Chinese goods.
Larry Kudlow, White House National Economic Council Director, has said the moves (tariffs on Chinese goods) scheduled for the middle and end of June are still on.
Clearly, two of the world's largest economies are still at loggerheads over trade issues and the probability of a full blow trade war would rise if China reports a big trade surplus with the US later today. In this case, risk assets like the Australian dollar will likely come under pressure.
On the other hand, a sharp drop in China's trade surplus with the US could put a bid under the Aussie dollar.
About China trade data
The Trade Balance released by the General Administration of Customs of the People’s Republic of China is a balance between exports and imports of total goods and services. A positive value shows trade surplus, while a negative value shows trade deficit. It is an event that generates some volatility for the CNY. As the Chinese economy has an influence on the global economy, this economic indicator would have an impact on the Forex market. In general, a high reading is seen as positive (or bullish) CNY, while a low reading is seen as negative (or bearish) for the CNY.
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