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Australian Dollar Falls as Chinese Data Fuels RBA Rate Cut Bets

Australian Dollar Falls as Chinese Data Fuels RBA Rate Cut Bets

Daniel Dubrovsky, Contributing Senior Strategist

Talking Points:

  • AUDUSD falls more than 0.4 percent in early Asia trade
  • Chinese imports, in Yuan terms, fall to a new 4 month low
  • Australian 2 year government bond yields decline fueling RBA rate cut bets

Macroeconomic events affect currency valuations. Stay updated with major releases on our calendar

The Australian Dollar fell more than 0.4 percent against the US Dollar after September’s Chinese trade data crossed the wires. In Yuan terms, China’s Trade Balance topped estimates coming in at its highest level since January 2013 of 376.20b. Exports fell -1.1 percent (YoY) beating the -7.4 percent estimate. Lastly, China’s imports missed expectations and fell -17.7 percent (YoY), the most in four months.

Following the release, China’s Customs Spokesman Huang Songping stated that China’s trade growth is still facing difficulties. In addition, he also pointed out that the drop in imports was mainly due to the commodity price slump. Looking ahead, Mr Songping forecasted that China’s fourth quarter trade data will likely improve.

Despite most of the data topping estimates and the positive rhetoric from China’s Customs Spokesman, Australian 2-year government bond yields declined. The sharp drop in imports may have fueled worries about slowing demand from Australia’s largest trading partner, which could have negative knock-on effects on growth and inflation. The RBA is already expected to cut rates at least once over the next 12 months, but today’s data make have hinted that the central bank will do so sooner rather than later.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.