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12 Feb 2014
Asia Recap: AUD buyers cheer up 'unbelievable' Chinese trade numbers
FXStreet (Barcelona) - The Australian and New Zealand currencies were the main beneficiary of an astonishingly strong China trade balance, catching most of the players by surprise.
While there is still high degree od suspicion towards the Chinese trade numbers being 'fabricated', the market traded the release with total conviction judging by the 50 pips spike in the Aussie towards 0.9065 before settling down around 0.9050.
The data showed China trade balance for January at $ 31.9bn vs +$23.45bn expected, with exports for January at 10.6% y/y vs +0.1% expected, and imports for January at 10.0% y/y vs +4.0% y/y expected.
According to Zhiwei Zhang, Economist at Nomura, "the strong level of export growth was puzzling", adding that "it is inconsistent with the new export order indexes from both HSBC and official PMIs." Zhang also argues that exports rise may have been driven "to some extent by capital inflows that were disguised as trade flows through mis-invoicing", he said.
The Japanese Yen traded unusually quiet, shrugging off comments against further QE by the BoJ from BOJ’s Kiuchi, who said more easing may do more harm than good, and also IMF’s Schiff, who noted there should be no need for further BOJ easing as long as inflation and expectations head towards the 2% target.
In other fundamental releases, New Zealand released the first negative economic data in quite a while, after retail card transactions for January came at -0.5% m/m vs +0.6% expected. The Australian Westpac February consumer confidence index also came lower-than-expected, at -3.0% m/m vs -1.7% prior. Lastly, Japan's January machinery Orders was surprisingly low at -15.7% m/m vs a decline of 4% expected.
While there is still high degree od suspicion towards the Chinese trade numbers being 'fabricated', the market traded the release with total conviction judging by the 50 pips spike in the Aussie towards 0.9065 before settling down around 0.9050.
The data showed China trade balance for January at $ 31.9bn vs +$23.45bn expected, with exports for January at 10.6% y/y vs +0.1% expected, and imports for January at 10.0% y/y vs +4.0% y/y expected.
According to Zhiwei Zhang, Economist at Nomura, "the strong level of export growth was puzzling", adding that "it is inconsistent with the new export order indexes from both HSBC and official PMIs." Zhang also argues that exports rise may have been driven "to some extent by capital inflows that were disguised as trade flows through mis-invoicing", he said.
The Japanese Yen traded unusually quiet, shrugging off comments against further QE by the BoJ from BOJ’s Kiuchi, who said more easing may do more harm than good, and also IMF’s Schiff, who noted there should be no need for further BOJ easing as long as inflation and expectations head towards the 2% target.
In other fundamental releases, New Zealand released the first negative economic data in quite a while, after retail card transactions for January came at -0.5% m/m vs +0.6% expected. The Australian Westpac February consumer confidence index also came lower-than-expected, at -3.0% m/m vs -1.7% prior. Lastly, Japan's January machinery Orders was surprisingly low at -15.7% m/m vs a decline of 4% expected.