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China’s April exports defy gravity, increasing 3.5% y/y while imports dropped -14.2%. Market reaction was limited, with CNY/CNH outperforming, per TD Securities.

Key quotes

“Exports recorded a surprise positive reading of 3.5% y/y (TD -5.7%, mkt -11%) while imports were softer at -14.2% y/y (TD -8.9%, mkt -10%).”

“Market reaction was limited, with CNY/CNH outperforming other Asian FX. We expect this to continue, with China likely to prefer to avoid trade-weighted (CFETS CNY) weakness, likely limiting depreciation at times of USD strength and limiting appreciation when the USD weakens.”