China Trade Data Signals a Weaker Demand Outlook

Highlights

• Trade data from China sent mixed signals on Thursday.
• Exports unexpectedly rose in November, while imports declined.
• The pullback in imports suggested a sluggish demand outlook.

China Trade Data Delivered Mixed Signals

China’s US dollar trade surplus widened from $56.53 billion to $68.39 billion in November. Exports unexpectedly increased by 0.5% year-over-year. Economists forecast exports to decline by 1.1%. In October, exports were down 6.4%. However, imports fell by 0.6% after increasing by 3.0% in October. Economists forecast imports to rise by 3.3% in November.

While the pickup in exports signaled improving trade terms in November, import numbers disappointed. A marked reverse in imports suggested a sluggish demand outlook.

Australian trade data from earlier in the session delivered a similar demand layout. Falling imports countered rising exports, also suggesting a weaker demand outlook.

AUD/USD Reaction to the Trade Data

Before the trade data from China, the AUD/USD rose to a high of $0.65586 before falling to a low of $0.65318.

However, in response to the trade data, the AUD/USD climbed to a high of $0.65368 before dipping to a low of $0.65335.

On Thursday, the AUD/USD was down 0.22% to $0.65339.

German Industrial Production to Influence Demand Outlook Sentiment

Later today, German industrial production and Eurozone GDP numbers need investor consideration. Improving production figures could ease concerns about the demand outlook.

Economists forecast industrial production to increase by 0.2% in October after falling 1.4% in September.

However, a larger-than-expected contraction in the Eurozone economy could sour the mood before the US session. According to second estimate numbers, the Eurozone economy contracted by 0.1% in Q3.

US Labor Market Stats to Drive Q2 2024 Fed Rate Cut Bets

The US labor market will be in focus again on Thursday. US jobless claims warrant investor attention. After weaker-than-expected ADP employment numbers, a spike in jobless claims would drive bets on a Q1 2024 Fed rate cut.

Economists forecast initial jobless claims to increase from 218k to 222k in the week ending December 2.