Risk appetite stalls after China trade data

Exports contract for a fourth month

Data released at the weekend showed China’s exports fell 1.1% y/y in November, the fourth consecutive month of negative growth. It is evident that the 18-month tariff was with the US is taking its toll on China’s export sector and could imply that they may be more ready to get a Phase 1 deal signed off as soon as possible. That might be construed as positive for risk, but the headline data is dominating sentiment for the time being.

Imports came in better than expected, rising 0.3% y/y versus the -1.8% expected and as a result the trade surplus narrowed to $38.7 billion. The Australian dollar was buoyed by the US payrolls data but has started the week in the red after the poor China trade data. The weak imports growth being one of the driving forces. The 55-day moving average looks poised to rise above the 100-day moving average at 0.6810 for the first time since February 8.

AUD/USD Daily Chart

Source: OANDA fxTrade

Equities stutter after payrolls rally

US equity indices were on the defensive during today’s Asian morning session after posting significant gains on Friday. US markets were down between 0.14% and 0.16% while the China A50 index lost 0.55% after the disappointing exports data at the weekend. That was the first negative day in five days and halted the index’s recent rally just short of the 55-day moving average at 13,859.

China A50 Daily Chart

Source: OANDA fxTrade

Fed on hold for longer

Friday’s stellar payrolls data virtually consigned this week’s FOMC deep into the non-event bin, with the only change expected from the last meeting being a possible more-hawkish bias to the accompanying statement. Money market pricing now implies a zero percent probability of a cut on Wednesday, and we have to look as far as September 2020 for the probability of a cut to shift above 50%, according to calculations by Bloomberg.

 

German trade data on tap

Today we see the trade balance for Germany for October. Exports are expected to fall 0.3% from a month earlier, with imports seen down 0.1%. The overall surplus is expected to narrow to €19.0 billion from €19.2 billion in September. The only other item of note is the Euro-zone’s Sentix investor confidence reading for December. That’s expected to slide to -4.9 from -4.5. There are no major US releases scheduled for today.