China’s General Administration of Customs will release March month trade balance figures sometime near 03:00 GMT on early Friday. Considering the influence Chinese data have over antipodeans, as the potential for further directives after the US-China trade spat seems to ease.
Market consensus favors an increase to $7.05 billion in headline trade balance number compared to $4.08 billion registered during February month. On the Chinese Yuan (CNY) basis, the trade balance may test 178.2 billion mark versus previous month release of 34.46 billion. The imports may drop -9.6% (YoY) from the previous -0.3% whereas exports could register an increase of 7.3% compared to -20.8% contraction marked earlier. The Aussie speculators will be looking for fresh signs of further economic strength in their largest trading partner’s reported figures in order to recover recent losses.
TD Securities came out with its forecast concerning the event wherein it said,
There’s been more noise than usual in the Chinese data on account of the timing of Chinese new year, but our model suggests that activity may be settling down. We look for near-flat import growth at +0.2% y/y and an export growth rebound of +3.0% y/y, generating a deficit of -$US800m. Along with the pickup in global PMIs of late, global trade might have finally turned a corner though the fact that both China export and import PMIs remain in contraction territory suggest any trade recovery will be slow.
How could it affect the AUD/USD?
Optimism surrounding the US-China trade deal recently fall short of overcoming disappointing data dossier from Australia and China and hence any deterioration in headline economics from its largest consumer can add further weakness into the Aussie.
On a brighter note, an upbeat trade balance number can pull the AUD/USD pair back towards 0.7145 immediate upside barrier including 100-day SMA, a break of which can help it aim for 0.7180 whereas 200-day simple moving average (SMA) at 200 could restrict the pair’s rally thereafter.
In a case of disappointment, as it has been off late with Chinese statistics, 0.7105–0.7100 area, comprising 50-day simple moving average (SMA) could gain market attention. On the break of 0.7100, an ascending trend-line from March 08, 0.7070, a break of which could shift bears’ attention to 0.7030 and 0.7000 supports.
