Aussie dips as China trade slows

Trade momentum wanes

The China trade data for November released at the weekend showed slowing dynamics. Export growth slumped to +5.4% y/y, the slowest pace of growth since March. The decline in imports growth was even more pronounced, as they rose a mere 3.0% y/y, the slowest pace in two years. The slump in imports meant the trade surplus rose to $44.74 billion, the highest this year, while the surplus with the US hit a record high $35.6 billion, driven mostly by a 25% decline in imports from the same period last year and moderated slightly by a 9.8% rise in exports.

As a result, The Aussie fell to the lowest level since November 13 versus the US dollar, while AUD/JPY slid to a five-week low. AUD/USD support at the 55-day moving average of 0.7187 was tested this morning, and so far looks as if it may hold on the day. The moving average has supported prices on a closing basis since October 31.

AUD/USD Daily Chart

Source: OANDA fxTrade

US dollar eases as US yields slide

The US dollar was slightly lower in the Asian session as the US 10-year yield fell to a near 4-month low. The 10-year yield hit 2.83%, the lowest since August 24, extending the slide from the peak near 3.25% early-November. Following last Friday’s disappointing US jobs report, market pricing is now suggesting a 67% chance of a 25 bps rate hike by the Fed next week, down from above 80% earlier this month. Fed speakers have now entered the blackout period ahead of the December 18-19 policy meeting.

UK data distracted by Brexit debate

Today we see how the UK’s manufacturing sector is faring, with production data for October on tap. Both industrial and manufacturing production are expected to slow from September, with -0.2% y/y and 0.0% forecast, respectively. The country’s goods trade balance is expected to show a widening of the deficit to GBP10.5 billion from GBP9.73 billion in September. However, the data will likely be overshadowed by the ongoing parliamentary debate on the Brexit deal ahead of the final vote scheduled for tomorrow.

German current account and trade data precede the UK releases, while Canada’s ADP employment report for November could attract attention in the North American session, given the stellar performance of the jobs sector in the official report released last Friday. A hefty 94,100 jobs were added, the most since May 2013, against expectations of an 11,000 gain.