Aussie Dollar Gains, Yen Falls as Markets Cheer China Trade Data

2016-04-13 05:13:00 Ilya Spivak

Talking Points:

Aussie, NZ Dollars rise with stocks and crude oil as Yen falls in Asia
China’s trade data cheered as exports, imports outperform forecasts
US data, Fed Beige Book may boost Dollar and trigger risk aversion

The Australian and New Zealand Dollars are outperforming in Asian trade, rising alongside regional share prices. Crude oil is likewise on the upswing while the anti-risk Japanese Yen is proving weakest on the session, speaking to a broad-based recovery in sentiment. The move seems to reflect follow-on momentum from similarly upbeat performance on Wall Street, where shares surged alongside the WTI contract following an Interfax report claiming that Russia and Saudi Arabia have agreed on the terms of an oil output level freeze.

China’s Trade Balance report helped stoke optimism. The data showed exports jumped 18.7 percent year-on-year in March, topping expectations calling for a 14.9 percent increase (in CNY terms). Meanwhile, imports fell 1.7 percent year-on-year, a notably smaller drawdown than the 4.8 percent drop envisioned by economists ahead of the release. Taken together, these figures paint a relatively upbeat picture of Chinese demand and cross-border sales prowess compared with consensus views.

Looking ahead, US Retail Sales and PPI figures as well as the Fed Beige Book survey of regional economic conditions are in focus. Receipts are expected to rise 0.1 percent in March having fallen by an equivalent amount in the prior month. Core wholesale inflation is expected to accelerate to a rate of 1.3 percent year-on-year over the same period. US economic news-flow has increasingly firmed relative to baseline forecasts since early February, setting the stage for upside surprises in the event that analysts’ models continue to underestimate the economy’s vigor.

This coupled with an upbeat Beige Book may help boost Fed rate hike expectations, driving the US Dollar broadly higher. Risk appetite may cool in this scenario as traders ponder headwinds posed by a tighter US policy posture than currently priced in. Shares may struggle to build on recent gains against such a backdrop, applying selling pressure to higher-yielding FX (Aussie, Kiwi and Canadian Dollars) as well as cycle-sensitive commodities (crude oil, copper) and precious metals.

Will crude oil and stock prices continue to recovery in the second quarter? See our forecasts here !

Asia Session

GMT	CCY	EVENT	ACT	EXP	PREV
22:45	NZD	Food Prices (MoM) (MAR)	0.5%	-	-0.6%
23:50	JPY	Money Stock M2 (YoY) (MAR)	3.2%	3.1%	3.1%
23:50	JPY	Money Stock M3 (YoY) (MAR)	2.6%	2.5%	2.5%
23:50	JPY	PPI (MoM) (MAR)	-0.1%	0.0%	-0.2%
23:50	JPY	PPI (YoY) (MAR)	-3.8%	-3.5%	-3.4%
0:30	AUD	Westpac Consumer Conf Index (APR)	95.1	-	99.1
0:30	AUD	Westpac Consumer Conf SA (MoM) (APR)	-4.0%	-	-2.2%
2:00	CNY	Trade Balance (CNY) (MAR)	194.60b	203.65b	209.50b
2:00	CNY	Exports (CNY) (YoY) (MAR)	18.7%	14.9%	-20.6%
2:00	CNY	Imports (CNY) (YoY) (MAR)	-1.7%	-4.8%	-8.0%
2:22	CNY	Trade Balance ($) (MAR)	$29.86b	$34.95b	$32.59b
2:22	CNY	Exports ($) (YoY) (MAR)	11.5%	10.0%	-25.4%
2:22	CNY	Imports ($) (YoY) (MAR)	-13.8%	-10.1%	-13.8%

European Session

GMT	CCY	EVENT	EXP	PREV	IMPACT
6:45	EUR	France CPI (MoM) (MAR F)	0.7%	0.7%	Low
6:45	EUR	France CPI (YoY) (MAR F)	-0.2%	-0.2%	Low
6:45	EUR	France CPI - EU Harmonized (MoM) (MAR F)	0.7%	0.7%	Low
6:45	EUR	France CPI - EU Harmonized (YoY) (MAR F)	-0.1%	-0.1%	Low
9:00	EUR	Industrial Production (MoM) (FEB)	-0.7%	2.1%	Medium
9:00	EUR	Industrial Production (YoY) (FEB)	1.3%	2.8%	Medium