Australian Dollar Sold as Chinese Trade Balance Unexpectedly Improves
Data released by the China Economic Information Network showed the country’s trade balance unexpectedly rose to $5.35B in March, up from -$31.48B the previous month. The market had expected a trade deficit of -3.15B this month, so analysts were surprised by the release which painted a rosier image of the Chinese economy.
The unanticipated surplus cut traders’ expectations that the People’s Bank of China would provide stimulus to an economy that has been slowing in growth over the past few months. A slowing Chinese economy would hurt demand for foreign imports, such as those originating in Australia. A flagging Aussie export sector would suggest room for the Reserve Bank of Australia to reduce interest rates.
Following the release, the Australian Dollar fell under significant selling pressure, falling from 1.0355 to as low as 1.0306.
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