AUD: AUD holds ground after China import data rise in April
The Australian Dollar moved higher after the China imports grew by 8.4% in the April month from 5.4% in the March month, Exports grew by 1.5% from 1.0% in the March month. US Trade Balance shows 72.55 Billion in the April month from 58.55 Billion in the March month and expected is 76.77 Billion. Anyhow, US Tariffs on China Goods made Trade balance higher is good thing for Australian exports and imports. China economy growing is helpful for branches like Australia and NZ economy booster.
AUDUSD is moving in Symmetrical Triangle and market has reached lower high area of the channel
The Australian Dollar (AUD) remains relatively subdued on Thursday, reflecting the Reserve Bank of Australia (RBA)’s less hawkish tone, notably following last week’s inflation data surpassing expectations. However, the RBA noted a halt in recent progress in inflation control, maintaining a flexible approach. The RBA decided to hold its interest rate steady at 4.35% on Tuesday.
In March, Australian inflation rose, contrary to market forecasts, prompting RBA Governor Michele Bullock to underscore vigilance regarding inflation risks. Bullock believes that current interest rates are suitably positioned to guide inflation back within its target range of 2-3% by the second half of 2025, reaching the midpoint by 2026.
The US Dollar Index (DXY), which measures the USD against six major currencies, strengthened on the sentiment of the Federal Reserve (Fed) potentially maintaining higher interest rates for an extended period. This drove US Treasury yields higher, providing support for the USD.
In market news, the AUD remained subdued due to the RBA’s less hawkish stance. Chinese Imports (YoY) surged by 8.4% in April, surpassing expectations, while exports increased by 1.5%, slightly higher than anticipated. However, concerns lingered over potential additional US tariffs on Chinese goods. Australian Retail Sales (QoQ) declined by 0.4% in Q1 2024, contrasting with the growth in Q4 2023.
The ASX 200 Index ended a five-day winning streak, driven by declines in bank stocks due to regulatory concerns and influenced by a weaker performance on Wall Street amidst mixed corporate earnings and the Fed’s hawkish stance.
Societe Generale expressed skepticism about the RBA’s economic growth optimism, foreseeing a downturn, partly due to the effects of RBA rate hikes. Federal Reserve Bank of Boston President Susan Collins emphasized the need for moderation in the US economy to achieve the central bank’s inflation target, while Minneapolis Fed President Neel Kashkari suggested a steady rate outlook with minimal likelihood of hikes.
Analysts anticipate the RBA’s interest rate to peak at 4.35% in November 2023 before declining to 3.10% by December 2025.
AUD: Chinese imports surge 8.4% in April, surpassing expectations with increased purchases from the U.S.
The Australian Dollar saw an uptick as a result of China’s substantial 8.4% surge in imports during April, compared to a modest 5.4% growth observed in March. Concurrently, China’s export figures also displayed improvement, with a 1.5% increase noted for April, up from a 1.0% uptick the previous month. Moreover, the US Trade Balance for April registered at $72.55 billion, marking an increase from March’s $58.55 billion, albeit falling short of the anticipated $76.77 billion. Despite this, the imposition of US tariffs on Chinese goods has indirectly bolstered the trade balance, a phenomenon which bodes well for both Australian imports and exports. The buoyancy in China’s economic trajectory not only augurs positively for Australia but also acts as a significant catalyst for fostering economic dynamism in adjacent regions, such as New Zealand.
AUDCAD is moving in Ascending channel and market has reached higher low area of the channel
China’s customs agency released data on Thursday revealing that exports for April were in line with expectations, while imports exceeded forecasts.
Despite a decrease in exports to the U.S., European Union, and Russia, Chinese imports from these regions saw an increase last month, as calculated by CNBC based on official data.
Globally, China’s exports grew by 1.5% year-on-year in April in U.S. dollar terms, while imports surged by 8.4%, according to the data. Reuters had anticipated export growth of 1.5% year-on-year and a 4.8% increase in imports.
In March, both exports and imports had experienced a year-on-year decline.
Chinese imports from the U.S. rose by 9% in April compared to a year ago, while exports to the U.S. decreased by nearly 3%. The U.S. remains China’s largest trading partner individually, while the Association of Southeast Asian Nations (ASEAN) holds that position regionally. China’s exports to ASEAN increased by 8% in April year-on-year, with imports rising by 5%.
Exports to the EU decreased by approximately 3.5%, while imports increased by nearly 2.5%.
The data indicated a rise in exports and imports to Vietnam, though it did not provide a breakdown for Mexico.
April witnessed an increase in China’s imports and exports of integrated circuits compared to the previous year. By volume, exports of cars, LCD panel displays, and home appliances rose, while cellphone exports slightly decreased. Ship exports also experienced a drop.
China’s imports of crude oil, natural gas, steel, plastics, medicines, automatic data processing machines and parts all increased, while imports of cosmetics declined.
Concerning supply chain diversification, lackluster domestic demand weighed on imports, while slowing global demand and tensions with the U.S. pressured exports. The Biden administration proposed tripling tariffs on Chinese steel, while former President Donald Trump suggested a 60% tariff increase on Chinese goods if reelected. The Covid-19 pandemic prompted multinational corporations to diversify their supply chains away from China, though much of the diverted trade still has Chinese origins or comes from Chinese-invested factories in other countries, according to Nomura analysts.
AUD: China’s trade rebounds, indicating demand recovery
The Australian Dollar experienced an upward trend following China’s notable increase in imports by 8.4% in April, compared to a growth of 5.4% in March. Similarly, exports from China saw a rise of 1.5% in April, up from 1.0% in March. Additionally, the US Trade Balance recorded a figure of $72.55 billion in April, compared to $58.55 billion in March, falling slightly short of the expected $76.77 billion. Despite this, the imposition of US tariffs on Chinese goods has contributed to a higher trade balance, which is generally favorable for Australian exports and imports. The growth of the Chinese economy serves as a significant boost not only for Australia but also for neighboring economies like New Zealand, fostering economic expansion across the region.
AUDUSD is moving in Ascending channel and market has reached higher low area of the channel
China’s exports and imports rebounded in April following a contraction the previous month, according to customs data released on Thursday. This resurgence signals an encouraging uptick in demand both domestically and internationally, providing a much-needed boost to China’s fragile economic recovery.
Shipments from China grew by 1.5% year-on-year last month, aligning with economists’ forecasts and marking a significant turnaround from the 7.5% decline seen in March, which had been the first contraction since November. Imports for April surged by 8.4%, surpassing expectations of a 4.8% increase and reversing the 1.9% fall experienced in March.
Zhang Zhiwei, chief economist at Pinpoint Asset Management, noted that exports have been a bright spot in China’s economy this year, attributing this partly to weak domestic demand leading to deflationary pressure, which in turn enhances China’s export competitiveness.
Despite faster-than-expected growth in the first quarter, recent data on exports, consumer inflation, producer prices, and bank lending for March suggest that momentum may be faltering. Additionally, the ongoing property crisis continues to pose challenges, prompting calls for further policy stimulus.
Although China managed to navigate early challenges successfully, with several economic indicators outperforming forecasts, Fitch’s recent negative outlook on China’s sovereign credit rating underscores the risks associated with slowing growth and rising government debt.
In response to these challenges, China’s top decision-making body, the Politburo of the Communist Party, announced plans to bolster the economy through prudent monetary and proactive fiscal policies, including adjustments to interest rates and bank reserve requirement ratios.
China has set a 2024 economic growth target of around 5%, which analysts view as ambitious without significant additional stimulus. Furthermore, Chinese exporters continue to face challenges, including overcapacity, pricing pressures, and competition for market share, especially as overseas demand remains subdued.
Looking ahead, analysts anticipate increased exports of industrial inputs like chemicals, fabric, auto parts, and electric machinery as more Chinese companies invest overseas to mitigate potential sanctions from the U.S.
China’s trade surplus expanded to $72.35 billion in April, slightly below forecasts but significantly higher than the $58.55 billion recorded in March, underscoring the resilience of China’s trade sector amid ongoing global uncertainties.
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