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China Trade Balance overview

China’s latest Trade Balance figures are due Friday, expected sometime after 02:00 GMT, and traders will be taking extra notice of China’s import and Export figures as the US-China trade war begins to heat up. Markets are expecting China’s June Trade Balance in USD terms to lift to $27.61 billion in June, up from the previous reading of $24.92 billion in May.  

Analysts are split on China’s imports forecast, with Barclay’s analysts noting that, “we expect export growth to moderate to single digits in June, given the contraction in PMI new export orders index amid escalating trade tensions. We expect import growth to remain solid at c.20 (% y/y) despite some moderation.” Meanwhile, analysts at TD Securities are expecting a healthier reading China’s import figures:  “Our models utilising trade data from key trading partners and commodity prices, point to another healthy increase in imports in June, likely up 23.3% y/y following a 26.0% y/ y rise in April. Export growth is likely to decelerate, with a less than consensus 8.7% y/ y increase expected. Consequently the trade balance is likely to come in around USD 22.5bn in May.

How could it affect the AUD/USD?

With the US-China trade war heating up, traders will be paying extra attention to China’s trade numbers, and market volatility could spike if the readings come in wide of the forecasts, especially in the thin-volume Asia session. As noted by FXStreet’s own Valeria Bednarik, “technically, the 4 hours chart shows that the price settled above a horizontal 100 SMA, but below a bearish 20 SMA, while technical indicators recovered some ground within negative levels, but with the RSI losing upward strength, currently flat at 48, limiting chances of a steeper recovery, at least as long as the pair remains below 0.7440/50, the immediate resistance area.”

Support levels: 0.7370 0.7340 0.7310

Resistance levels: 0.7445 0.7490 0.7525

Key notes

AUD/USD analysis: Chinese trade balance data to set the tone

About the China 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 de surplus, while a negative value shows trade deficit. It is an event that generates some volatility for the CNY. As the Chinese economy has 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.