(MENAFN- DailyFX) CHINA TRADE, AUSTRALIAN DOLLAR - TALKING POINTS:
- Australian Dollarup as China reports better-than-expected import, export data
- New Zealand Dollarticked down andYenfell as the print buoyed risk appetite
- Follow-through may be absent markets weigh Sino-US trade war de-escalation
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The Australian Dollar rose as China reported better-than-expected trade data. Exports fell 0.9 percent on-year in October, marking a far smaller drawdown than the 3.9 percent decline expected. Imports ticked down 6.4 percent, a similarly less-bad result than median forecasts envisioning a loss of 7.8 percent.
Traders often extrapolate positive news out of the East Asian giant as supportive for Australia because the former country is the latter's largest export market. They reason that an upturn in China's prospects – even in relative terms – bodes well for Australian firms' demand outlook, and thereby the economy as a whole.
China's commanding position as one of the top engines of global growth also means that rosier data flow has scope to boost broader sentiment. It is thus true to form that the New Zealand Dollar – another cycle-sensitive unit – rose with itsAussiecousin while the anti-risk Japanese Yen pulled back.
Chart created withTradingView
AUSTRALIAN, NEW ZEALAND DOLLAR OUTLOOK HINGES ON US-CHINA TRADE DEAL
Follow-through might be limited from here. Investors are unlikely to commit in amid uncertainty about the prospects of even a 'phase one' US-China trade accord. Markets cheeredBeijing's hint at a coordinated tariff rollbackbut whether the White House would sign up to such a move wassoon in doubt .
The technical picture is ominous as well. The Aussie Dollarchallenging the bounds of a month-long uptrend . The like-mindedKiwiDollar is in asimilarly precarious position . Building pro-cyclical exposure may be still more unattractive as liquidity thins into the weekend even as headline risk remains.
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-p-- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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