- AUD/USD is not impressed by a better-than-expected China trade surplus.
- The drop in imports indicates a weakness in domestic demand.
- The AUD may pick up a bid on hawkish comments by Westpac’s head.
A better-than-expected China trade balance is struggling to put a bid under the Aussie Dollar – a G-7 proxy for China.
The nation’s trade balance widened to $42.81 billion in October, bettering the estimate of $40.10 billion. Imports fell 6.4% year-on-year in USD terms and by 0.4% in CNY terms. Meanwhile, exports or outbound shipments fell 0.9% in USD terms but rose 4.9% in CNY terms.
While trade surplus increased, the dismal performance of imports indicate weakening domestic demand and could revive fears of a deeper economic slowdown in the world’s second-largest economy.
Hence, AUD’s muted response to the upbeat headline is not surprising. Currently, the pair is trading at 0.6882, having added just five pips post-China data. The pair is still reporting a 0.22% drop on the day.
The AUD, however, may pick up a bid as Westpac’s boss while speaking at his six-monthly grilling before a parliamentary committee said more interest rate cuts by the Reserve Bank of Australia (RBA) might have a “perverse” impact on the economy.
The RBA’s statement of monetary policy released earlier today also said that further easing might convey an overtly negative view on the economy.
Technical levels
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