China Trade Balance overview
Early Thursday sees China's latest Trade Balance figures, expected sometime around 03:00 GMT, a release that will be watched closely, especially by Antipodean traders, as the potential for steepening knock-on effects from the US-China trade spat loom larger, and Aussie speculators will be looking for signs of further economic slowdown in their largest trading partner's reported figures. Reporting risks are geared towards the downside, and as analysts at Nomura noted on China's trade balance expectations:
"We expect export growth to moderate, but remain relatively solid at 13.0% y-o-y in October after higher-than-expected growth in September, as front-loading activity should extend into the rest of this year. Import growth is likely to slow more visibly, as importers may postpone some of their import orders from October to November to benefit from import tariff cuts (the most-favoured nation import tariff rate cuts announced by the State Council on 30 September came into effect on 1 November)."
How could it affect the AUD/USD?
The AUD/USD has been bolstered by recent Dollar-short flows across broader markets, fueled largely by the results of the US' mid-term elections, but fundamental factors for the Aussie remain skewed towards the downside, and a miss for China's trade figures could see near-term bullish plays evaporate; however, intraday factors for the AUD/USD are boding well, according to FXStreet's Chief Analyst Valeria Bednarik: "from a technical point of view, the AUD/USD pair is poised to extend its advance, as it's currently developing well above all of its moving averages, with the 20 SMA maintaining a strong bullish slope after crossing above the larger ones. Furthermore, the pair is far above the 61.8% retracement of its September/October decline at 0.7200, and the strong static support at 0.7250. Technical indicators in the mentioned chart have eased modestly, holding near overbought readings, rather reflecting the intraday retracement from daily highs than suggesting an upcoming slide."
Support levels: 0.7250 0.7200 0.7165
Resistance levels: 0.7315 0.7340 0.7375
About China's Trade Balance
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 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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