Although the Chinese trade balance for May failed to beat expectations as the global economy slowed, a better than expected import growth showed that China was continuing to import, driving up the Australian dollar and the New Zealand dollar, the currencies of two of China’s largest raw materials suppliers.
A breakdown of import data shows continued demand of metals and ore. Iron ore imports grew from 52.9 million tons in April to 53.3 million tons on May. Scrap copper and aluminum imports also grew at a similar pace. Total imports from Australia expanded from 6.142 million USD the previous month to 6.217 million USD in May.
Although year-over-year demand for Chinese goods fell from the previous record, individual country data from China’s largest trading partners still show considerable improvement. Exports to the United States grew by 26.7% and goods to the EU expanded by 28.2%, showing continued demand despite the recent slowdown in those two countries.
Chinese Trade Balance. Chart generated with Bloomberg LP Professional.
Following the better than expected rate of Chinese imports especially of raw materials, the Australian dollar gained against the Greenback. Although the Kiwi dollar also benefited from the report, its strength against its American counterpart was relatively muted as imports of New Zealand goods, mostly soft commodities, remained relatively flat. Despite the improved outlook for demand of Oceanic goods, the drop in exports stirred concerns of a Chinese economic slowdown. The benchmark Shanghai Composite was off 0.52% immediately after the release at 2689.17.
AUDUSD 5 minute chart; vertical line indicates time of release. Chart generated with FXCM Strategy Trader
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