AUD/USD Fundamental Forecast – January 14, 2016

Analysis and Recommendation:

The AUD/USD gained 50 points to trade above the 70 level again. The Aussie climbed to 0.7036 after the release of Chinese trade data. The Aussie then extended gains on data showing China’s exports increased 2.3 per cent in December in yuan terms from a year earlier. Imports extended to a 14-month stretch of declines, falling 4 per cent in yuan terms. A trade surplus of 382 billion ($US58 billion) remains.

The numbers were much stronger than expectations. Economists had predicted a 4.1 per cent drop in exports and a 7.9 per cent slump in imports. “There’s definitely been a reversal in overly negative sentiment as we’ve seen some stability in the bank’s ability to manage the Chinese economy,” says Angus Nicholson, foreign exchange analyst at IG Markets.

“The Chinese authorities have been very keen to bring down the spread between the onshore and offshore renminbi this week and they’ve really successful at that.” Equity markets have also calmed in recent days allowing investors to cautiously look towards riskier assets, such as the Australian dollar.

On Wednesday, official data showed China’s exports rising 2.3% in December from a year earlier in yuan terms, after a drop of 3.7% in November. The data was “much better than expected” and “likely to drive market higher, forcing recent shorts to cover,” Andrew Sullivan, managing director at Haitong International Securities, wrote in a note.

One concern that remains on investors’ minds is the tightened liquidity for the yuan offshore, where borrowing costs for Hong Kong banks soared past 66% on Tuesday, making it prohibitively expensive for investors to finance bets against the currency, known as a short sale.

FxEmpire provides in-depth analysis for each asset we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports, which covers the current week and are published by Sunday before the new week begins. Daily we share any new events, forecasts or analysis that affect the current day. To achieve a full accurate understanding it is important that you study all of our data and analysis as a whole.

Today’s economic releases:

 

Upcoming Economic Events that you should be monitoring:

Thursday, January 14, 2016

Government Bond Auctions

Date Time and Country

Jan 13 11:05 Norway Holds bond auction

Jan 13 11:10 Italy Holds BTP

Jan 13 11:30 Germany Euro 5bn Feb 2026 Bund

Jan 13 19:00 US Holds 10-year note auction

Jan 14 10:30 Spain Auctions Bonos/Obligaciones

Jan 14 19:00 US Holds 30-year bond auction

Jan 14 N/A US Announces details of 10-yr TIPS auction on Jan 21

Jan 18 11:00 Belgium Holds OLO auction