When is the China Trade Balance, and how could it affect AUD/USD?

China Trade Balance overview

Early Thursday sees China's January month Trade Balance figures, expected sometime around 03:00 GMT. The release will be closely watched, especially by Antipodean traders, like the Australian Dollar (AUD) as the potential for further directives after the US-China trade spat seem to ease. Forecasts suggest a decline to $33.50 billion in headline Trade Balance number compared to $57.06 billion registered during December last year. The imports may drop to -10% from the previous -7.6% whereas exports could register a lesser decline of -3.2% compared to -4.4% earlier reading. The Aussie speculators will be looking for signs of further economic slowdown in their largest trading partner's reported figures in order to stretch the recent downturn. TD Securities’ analysts say:

Our model points to an outsized decline in Chinese imports (-23.0% y/y ) in January, largely due to base effects but also much weaker exports data from South Korea, Vietnam, Singapore and Taiwan. Adding in the impact of the seasonal impact of Chinese New Year, with weaker activity towards the end of January, it points to a very soft imports print. Exports are likely to look slightly better (+2.4% y/y), albeit still remaining weak. Such a weak outcome will likely provoke further speculation of an easier Chinese policy stance and put pressure on China to agree on a trade deal at the meeting between President’s Xi and Trump at the end of February.

How could it affect the AUD/USD?

While mixed plays between the recent optimism surrounding the US-China trade deal and stronger USD has been disturbing AUD/USD traders, any deterioration in headline economics from its largest consumer can add weakness into the Aussie.

On a brighter note, an upbeat trade balance number can propel the AUD/USD to surpass 0.7135-40 immediate upside barrier and aim for 0.7185 whereas 0.7225 could restrict the pair’s rally then after.

In case of disappointment, as it has been off late with Chinese statistics, the quote may slide back towards 0.7050 with 0.7015 and 0.6980 likely being follow-on rests to watch.

Key notes

AUD/USD Technical Analysis: Failure to cross 0.7135-40 seems to recall the weekly low around 0.7050

AUD/USD holds above 0.71 despite USD strength

About China's Trade Balance

The Trade Balance released by the General Administration of Customs of the People’s Republic of China is a balance between exports and imports of total goods and services. A positive value shows trade surplus, while a negative value shows trade deficit. It is an event that generates some volatility for the CNY. As the Chinese economy has influence on the global economy, this economic indicator would have an impact on the Forex market. In general, a high reading is seen as positive (or bullish) CNY, while a low reading is seen as negative (or bearish) for the CNY.