Australian Dollar Shrugs off China Trade Surplus Surge, Where to for AUD/USD?

Australian Greenback, AUD/USD, China Commerce Stability – Market Alert

  • Australian Greenback brushes apart surging China commerce surplus
  • This was pushed by a cloth slowdown in import figures
  • China’s exterior sector could also be susceptible to fading US demand

The Australian Greenback confirmed a comparatively mute response to December Chinese language commerce figures. Barely increased export figures (20.9% y/y vs. 20% seen) and lower-than-expected import information (19.5% vs 27.8% seen) helped drive China’s commerce surplus to US$94.46b versus 73.95b anticipated. As this information is used to calculate GDP, at the moment’s optimistic studying could provide a lift to the nation’s financial system.

In response to Bloomberg, China posted a file 4.36 trillion Yuan commerce surplus final yr. That is largely because of surging exports, which possible offset among the financial headwinds from the Evergrande disaster and authorities crackdowns on the know-how and training sectors. With that in thoughts, the street forward in 2022 might look robust for China’s exterior sector.

A key driver of Chinese language export demand is United States consumption. Development is predicted to sluggish on the planet’s largest financial system in comparison with 2021 amid fading fiscal and financial stimulus. In the meantime, easing Covid restrictions might shift demand slowly away from bodily items to companies. That is as China could use comparatively stricter lockdowns. With that in thoughts, slowing Chinese language exports might dent the Yuan.

As for the Australian Greenback, which tends to be the market’s most popular liquid China proxy, it should in all probability be extra vital to observe Chinese language imports. China is Australia’s largest buying and selling accomplice. Slowing development on the planet’s second-largest financial system could weaken demand for Australian items. This has been the case, with geopolitical tensions between the 2 denting China imports from Australia since September.

Australian Greenback Technical Evaluation

From a technical standpoint, the Australian Greenback seems to be buying and selling inside a Bear Flag chart formation. If AUD/USD manages to interrupt beneath the ground of the near-term rising channel, this might open the door to resuming losses from November. Instant resistance seems to be the 61.8% Fibonacci retracement stage at 0.7341.

AUD/USD Each day Chart

Australian Dollar Shrugs off China Trade Surplus Surge, Where to for AUD/USD?

— Written by Daniel Dubrovsky, Strategist for DailyFX.com

To contact Daniel, use the feedback part beneath or @ddubrovskyFX on Twitter


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