Talking Points:

  • China reports better-than-expected trade surplus led by exports
  • Data hinting at the stabilization of industry on the mainland could lead to regional growth
  • Investors likely navigating towards risk-on sentiment; Carry-trades, Nikkei futures higher, Yen lower

Yen crosses traded higher at the open as data over the weekend reported a better-than-expected Chinese trade surplus. In August, exports grew 7.2 percent year-over-year to beat expectations for a more modest 5.5 percent. Imports slowed to 7.0 percent from 10.9 the previous month while economists had expected a slight uptick. This release likely reinforces recent data showing a stabilization of the Chinese economy. As the world’s second largest economy, a pickup on the mainland could translate to regional economic growth. Investors likely moved to capitalize on such expectations with risk-on positions that sent the safe-haven Yen lower. Indeed, Nikkei futures traded higher while the Japanese Yen fell lower.

(JPN225 vs USD/JPY 5-Minute Chart)

Chinese_Trade_Surplus_Could_Hint_At_Regional_Growth_USDJPY_Higher_body_Picture_2.png, Chinese Trade Surplus Could Hint At Regional Growth, USD/JPY Higher

USD/JPY (5-Minute Chart)

Chinese_Trade_Surplus_Could_Hint_At_Regional_Growth_USDJPY_Higher_body_Picture_1.png, Chinese Trade Surplus Could Hint At Regional Growth, USD/JPY Higher

Source: FXCM Marketscope

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Jimmy Yang, DailyFX Research Team