THE TAKEWAY: Chinese trade balance 31.73B in June versus 18.70B in May, beat expectations set at 24.00B > Exports increased by 11.3 percent year over year, Imports increased 6.3 percent year over year > Australian Dollar weakens
Australian Dollar falls even though Chinese trade balance came in better than expected at 31.73B in June. Market expectations called for 24.00B and last month’s trade balance came in weaker at 18.70B suggesting that demand for Chinese goods may have improved.
Chinese exports increased by 11.3 percent in June from last year beating expectations set at 10.6 percent. Imports came in at 6.3 percent in June over the prior year falling short of expectations set at 11 percent.
The Australian export-led economy derives much of its wealth from Chinese demand for commodity production. Furthermore, Chinese data last week produced rate cuts for the first time since 2008 and CPI data which marked its slowest rate of increase in 29 months, signaling to markets that the world’s second largest economy has likely begun to slow.
A slowing Chinese economy has a propensity to weigh heavily on the risk-sensitive Australian Dollar.
AUD/USD, 1 Minute Chart