Aussie Dollar Rises on China’s Trade Surplus, US NFP in Focus
The China Trade surplus came at $82.65 Billion in the May month from $72.35 Billion printed in the April month and $73 Billion is expected. The Australian Dollar appreciated after the data printed. RBA Governor Michelle Bullock said yesterday RBA ready to increase the rates if the inflation rates did not return to 1-3% target.
AUDUSD is moving in box pattern and market has fallen from the resistance area of the pattern
The Australian Dollar (AUD) edges higher following the release of China’s Trade Balance data on Friday. The National Bureau of Statistics of China reported a Trade Surplus of $82.62 billion in May, exceeding the expected $73.00 billion and the previous $72.35 billion. Given the close trade relationship between Australia and China, changes in China’s economy can significantly impact the Australian market.
AUD traders are also anticipating a speech by Andrew Hauser, Deputy Governor of the Reserve Bank of Australia (RBA), regarding Australia’s economic outlook later in the day. Additionally, attention is on the upcoming US employment data releases, including Average Hourly Earnings and Nonfarm Payrolls.
The Australian Dollar gained support from the widened Trade Surplus reported on Thursday. Furthermore, a hawkish statement by RBA Governor Michele Bullock on Wednesday bolstered the AUD’s strength. Bullock indicated that the central bank is prepared to raise interest rates if the Consumer Price Index (CPI) does not fall within the target range of 1%-3%, as reported by NCA NewsWire.
Meanwhile, the US Dollar (USD) weakened due to lower employment data in the United States, raising hopes for two interest rate cuts by the US Federal Reserve (Fed) in 2024. On Thursday, Initial Jobless Claims showed an increase of 8,000 to 229,000 for the week ending May 31, surpassing market expectations of 220,000. This is the highest level since the eight-month high of 232,000 recorded in early May.
Market Update: The Australian Dollar remains steady due to investor caution.
The ASX 200 Index climbed towards 7,850 on Friday, with mining and energy stocks driving the market higher due to stronger commodity prices. This movement was influenced by signs of a cooling US labor market, which raised expectations for two Fed interest rate cuts this year.
A Reuters poll conducted from May 31 to June 5 indicated that nearly two-thirds of economists now predict an interest rate cut in September. Additionally, the CME FedWatch Tool shows a nearly 70.0% probability of a Fed rate cut by at least 25 basis points in September, up from 51.0% a week earlier.
Australia’s Trade Balance widened to 6,548 million AUD ($4,321.68 million USD) month-over-month (MoM) in May, surpassing the expected 5,500 million AUD and April’s balance of 5,024 million AUD. Imports dropped by 7.2% MoM in May, reversing April’s 4.2% increase. Exports declined by 2.5%, following a 0.6% decrease previously.
On Wednesday, the ISM US Services PMI rose to 53.8 in May, the highest in nine months, significantly beating the forecast of 50.8. Conversely, the ADP US Employment Change report showed an addition of 152,000 new workers in May, the lowest in four months and below the forecast of 175,000 and the revised April figure of 188,000.
Australia’s Gross Domestic Product (GDP) for the first quarter grew by 0.1%, below the expected 0.2%. On an annual basis, the economy grew by 1.1%, slightly below the anticipated 1.2%.
China’s May Exports Surge, Trade Balance Widens as Imports Fall
In May, China’s trade surplus rose to $82.65 billion, up from $72.35 billion in April and exceeding the expected $73 billion. This data led to an appreciation of the Australian Dollar.
RBA Governor Michele Bullock stated yesterday that the Reserve Bank of Australia is prepared to increase interest rates if inflation does not return to the target range of 1-3%.
AUDCHF is moving in Ascending channel and market has reached higher low area of the channel
Chinese exports saw significant growth in May, driven by steady industrial output and increased overseas demand, resulting in a substantial increase in the country’s trade balance.
According to data from the Customs Administration released on Friday, Chinese exports grew 7.6% year-on-year in May, surpassing expectations of 6% and rebounding sharply from the previous month’s 1.5% increase.
The robust export performance indicated that Chinese industrial production, a crucial economic driver, remained stable. Meanwhile, overseas demand showed signs of recovery after a period of stagnation last year.
However, the sustained strength of Chinese exports has raised concerns about potential trade curbs from major export destinations due to oversupply and dumping issues. Earlier this year, the U.S. increased import duties on several Chinese industries, sparking worries that other developed economies might follow suit.
The strong export figures contributed to China’s trade balance widening to a surplus of $82.62 billion, exceeding expectations of $70.50 billion and April’s reading of $72.35 billion.
The spike in China’s trade surplus was also influenced by weak imports, which grew only 1.8% year-on-year in May. This figure fell short of the expected 4.2% increase and was a significant drop from the 8.4% growth recorded in the previous month.
The sluggish import growth suggested that despite improvements in certain areas of the Chinese economy, domestic demand remained largely subdued. This trend could indicate ongoing weaknesses in key aspects of the Chinese economy, particularly consumer spending and inflation.
China’s Exports Surge 7.6% in May, Exceed Expectations Amid Trade Tensions
In May, China’s trade surplus ascended to a substantial $82.65 billion, markedly surpassing April’s $72.35 billion and outstripping the anticipated $73 billion. This development catalyzed an appreciation of the Australian Dollar.
AUDCAD is moving in box pattern and market has reached resistance area of the pattern
In a related monetary policy stance, RBA Governor Michele Bullock articulated yesterday that the Reserve Bank of Australia stands poised to elevate interest rates should inflation fail to revert to the prescribed 1-3% target range.
China’s exports for May surpassed analyst expectations despite ongoing trade tensions, while imports fell short, as per customs data released on Friday.
Exports surged 7.6% in May compared to the same period last year, reaching $302.35 billion. Conversely, imports increased by only 1.8% to $219.73 billion, missing the forecasted 4% growth.
The rise in exports is partly attributed to a lower base from the previous year, when exports had declined by 7.5%. In contrast, April saw a 1.5% year-on-year increase in imports, with an 8.4% growth recorded in the same month.
Strong export performance expanded China’s trade surplus to $82.62 billion, up from $72.35 billion in April.
The growth in exports comes amidst heightened trade tensions with the US and Europe. The US is increasing tariffs on Chinese-made electric cars, while Europe is contemplating similar measures.
Additionally, China’s factory activity slowed more than anticipated in May. The manufacturing purchasing managers index from the China Federation of Logistics and Purchasing fell to 49.5 from April’s 50.4, indicating a contraction in the sector.
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