Trade Data out of China Hits the Aussie Dollar and Risk Sentiment

Earlier in the Day:

Economic data released through the Asian session this morning was on the lighter side but certainly not without influence. December trade data released out of China was the set of stats for the day, the ongoing trade war between the U.S and China raising market sensitivity to today’s figures.

Volumes were on the lighter side, with the Japan markets closed at the start of the week.

Out of China, the December trade surplus widened from US$44.71bn to US$57.06bn, coming in ahead of a forecasted widening to US$50.73bn.

While the trade surplus widened, it was for all the wrong reasons.

• Year-on-year, exports slid by 4.4% in December, coming up short of a forecasted 3% rise, following a 5.4% rise in November.
• Imports tumbled by 7.6%, falling well short of a forecasted 5.4% rise, following a 3% rise in November.

Following a string of disappointing manufacturing PMI numbers, the latest set of trade figures are yet another alarm bell for the Chinese economy, which will weigh on risk sentiment through the week.

The Aussie Dollar fell to a morning low $0.71796 upon release of the figures, before rising to $0.7180 at the time of writing, down 0.49% for the session.

Elsewhere, the Japanese Yen was up 0.36% to ¥108.09 against the U.S Dollar, while the Kiwi Dollar was down 0.31% to $0.6811, the Yen likely to be looking at ¥105 levels this week should earnings disappoint.

Following this morning’s weaker than anticipated trade data out of China, focus shifts to the first day of earnings, Citigroup first up later today. Expectations are for disappointment, leaving the Dow Mini down 196 points early on.

The ASX200 saw early upside erode to fall by 0.26% at the time of writing, with the CSI300 and Hang Seng down by 0.81% and 1.66% respectively.

The Day Ahead:

For the EUR, it’s a relatively quiet day ahead on the data front. Key stats scheduled for release are limited to November industrial production figures out of the Eurozone. With Germany’s November production figure having tumbled, according to figures last week, today’s figures are likely to be EUR negative, forecasts pointing to a 1.5% slide, month-on-month.

Outside of the numbers, market risk sentiment will likely have the final say, with earnings season kicking off and chatter from the Oval Office also likely to play a hand through the day.

At the time of writing, the EUR was down 0.02% to $1.467.

For the Pound, it’s a quiet day ahead on the data front, but certainly not for the Pound.

Focus will be on Parliament as the week long debate over Theresa May’s Brexit deal comes to an end, with a parliamentary vote expected to, not only sink the deal, but possibly bring an end to the Tory party leadership.

While Theresa May’s speech later today, which comes ahead of tomorrow’s vote, will attempt to garner support, the British PM has almost conceded that a vote against the deal will likely lead to an about turn on Brexit.

Parliament’s obligations to British voters will likely lead to a call for a new Referendum should Theresa May fail to get the EU to make further concessions.

Theresa May’s 3-day window will come to an end next Monday, if tomorrow’s vote goes against her. Parliament would then likely vote on any amended deal. Another vote against will certainly lead to a delay to Britain’s 29^th March departure date and could ultimately lead to a cancellation.

For the Pound, the less likely a Brexit outcome, the better for the Pound, though the one curve ball could be a vote of no confidence and a snap general election.

At the time of writing, the Pound was up by 0.01% to $1.2845, with updates from parliament the key driver through the day.

Across the Pond, there are no material stats scheduled to release to trouble the U.S Dollar, leaving the Greenback in the hands of U.S administration and the extended government shutdown and market reaction to the start of earnings season.

At the time of writing, the Dollar Spot Index was down 0.08% to 95.598.

For the Loonie, it’s also a quiet day on the data front, with this morning’s trade figures out of China weighing early on.

Sentiment towards growth and influence on crude oil prices ahead of this week’s OPEC and IEA monthly will be the key driver, an early slide in crude oil prices doing the damage at the start of the week.

The Loonie was down 0.13% to C$1.3284 against the U.S Dollar at the time of writing.