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Australian Dollar, China January Trade Data, Talking Points:

  • Australian trade data came in generally ahead of forecasts
  • Exports were strong in January but imports are still faltering
  • The Australian Dollar ticked up, but the real focus is on trade negotiations, not historic data

First-quarter technical and fundamental forecasts from the DailyFX analysts are out now.

The Australian Dollar rose a little Thursday following the release of strong export data amid China’s official trade balance figures.

Exports rose by 13.9% on the year in January, well ahead of market expectations which had centered around a rise of just 3.8%. December’s rise was just 0.2% Imports fell by 1.9%, exactly as forecast, but that was still better than the previous month’s slide of 3.1%. The overall trade balance in Chinese Yuan terms was 271.2 billion, above the 245 billion expected.

In US Dollar terms the trade balance was $39.6 billion, below the previous month’s $57.06 billion.

The figures fall between the western holiday period and the Chinese Lunar New Year celebrations which this year took place in February, so it is likely that they have been to some extent distorted by both. However,they could also clearly have been worse given US/China trade tensions and it is this which may have given the Australian Dollar its modest lift.

Australian Dollar Vs US Dollar, 5-Minute Chart

Still, plenty of question markets remain, not least over Chinese domestic demand levels given those patchy import numbers and investors will keenly eye headlines from the US/China trade talks taking place this week in Beijing.

On its daily chart, AUD/USD has weakened sharply over the past couple of weeks, as the Reserve Bank of Australia appeared to change its mind on monetary guidance by admitting that record-low interest rates could yet fall further. That hit the Aussie last week, as did the RBA’s subsequent move to slash its growth and inflation forecasts.

Australian Dollar Vs US Dollar, Daily Chart

The pair has stabilized above the dominant downtrend channel which characterized much of last year, as overall global risk appetite has held up amid investor hopes for some form of trade settlement between China and the US.

However, the Australian Dollar’s complete lack of near- or medium-term interest rate support will continue to act as a powerful brake on any bullish impulses.

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Whether you’re new to trading or an old hand DailyFX has plenty of resources to help you. There’s our trading sentiment indicator which shows you live how IG clients are positioned right now. We also hold educational and analytical webinars and offer trading guides, with one specifically aimed at those new to foreign exchange markets. There’s also a Bitcoin guide. Be sure to make the most of them all. They were written by our seasoned trading experts and they’re all free.

--- Written by David Cottle, DailyFX Research

Follow David on Twitter@DavidCottleFX or use the Comments section below to get in touch!