AUD/JPY: No reaction to uptick in China’s trade surplus

• AUD/JPY is trading largely unchanged on the day despite the rise in China’s trade surplus.  
• The AUD is struggling to pick up a bid amid the rise in China’s offshore Yuan exchange rate.  

A rise in China’s trade surplus has failed to put a strong bid under the Aussie Dollar, leaving the AUD/JPY pair largely unchanged on the day at 73.50.

China’s imports tanked 8.5% year-on-year in September and Exports or outbound shipments fell by 3.2% year-on-year, pushing the trade surplus higher to $39.65 billion compared with a $34.84 billion surplus in August. Analysts had forecast $33.3 billion.

In Yuan terms, the trade surplus rose to CNY 280 billion.

The uptick in the trade surplus is boding well for the offshore Yuan (CNH). The USD/CNH pair is now trading at 7.0577, the lowest level since Sept. 16, having dropped from 7.08 in the last hour or so.

So far, however, the AUD has not been able to benefit from China data and the rise in the CNH, possibly because the uptick in the Trade Surplus was due to a sharp drop in imports – a sign of weakening domestic demand conditions.

Also, markets are worried that the latest US-China trade truce (reached on Friday) lacks proper dispute settlement mechanism and could fall apart, leading to further escalation of trade tensions. That could be capping the upside in the AUD/JPY pair.

That said, the futures on the S&P 500 are now reporting a 0.21% gain. Hence, AUD/JPY may explore the upside in the European session.

Technical levels