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China’s Trade Balance overview

China’s General Administration of Customs will release February month trade balance figures sometime near 03:00 GMT on early Friday. Considering the influence Chinese data have over antipodeans, as the potential for further directives after the US-China trade spat seems to ease. Market consensus favors a decline to $26.38 billion in headline trade balance number compared to $39.16 billion registered during January month. On the Chinese Yuan (CNY) basis, the trade balance may test 228.7 billion mark versus previous month release of 271.2 billion. The imports may drop -1.4% (YoY) from the previous -1.5% whereas exports could register a higher decline of -4.8% compared to +9.1% growth marked earlier. The Aussie speculators will be looking for fresh signs of further economic slowdown in their largest trading partner’s reported figures in order to stretch the recent downturn.  

Analysts at Rabobank say,

“Today we will get to see Chinese trade data, and the expectations are for exports to plunge 5% y/y in USD terms and imports to edge down -0.6%. Neither would be a healthy sign, and the former in particular would point to China’s balance of payments outlook getting far worse in 2019.”

Westpac says,

“There are various Asian data releases today but the focus will be on China Feb trade. Jan trade data surprised on the firm side but great caution is always needed around lunar new year holidays. The monthly changes are very hard to forecast but for what it’s worth, the median forecast is -5%yr on exports, -0.6%yr on imports, for a smaller trade surplus of $26bn.”

How could it affect the AUD/USD?

Optimism surrounding the US-China trade deal recently fall short of overcoming disappointing data dossier from Australia and China and hence any deterioration in headline economics from its largest consumer can add further weakness into the Aussie.

On a brighter note, an upbeat trade balance number can pull the AUD/USD pair back towards 0.7055 immediate upside barrier, a break of which can help it aim for 0.7080 whereas 50-day simple moving average (SMA) at 0.7130 and 100-day SMA figure of 0.7160 could restrict the pair’s rally thereafter.

In a case of disappointment, as it has been off late with Chinese statistics, the quote may slide back towards 0.6980 with 0.6930 and 0.6900 being likely follow-on rests to watch.

Key Notes

AUD/USD: Bears licking their lips at key 0.7020 horizontal level

AUD/USD Technical Analysis: Attempted recovery move remains capped at 50-hour SMA

About China’s Trade Balance

The Trade Balance released by the General Administration of Customs of the People’s Republic of China is a balance between exports and imports of total goods and services. A positive value shows a trade surplus, while a negative value shows a trade deficit. It is an event that generates some volatility for the CNY. As the Chinese economy has an influence on the global economy, this economic indicator would have an impact on the Forex market. In general, a high reading is seen as positive (or bullish) CNY, while a low reading is seen as negative (or bearish) for the CNY.