The dollar fell against the euro in late Asian session on Tuesday after weak Chinese trade data raised the euro’s safe haven appeal. The euro jumped above the 1.12 handle to climb to 1.1217. But the yen gave up its earlier gains from increased risk aversion and the dollar reversed earlier losses after hitting a low of 118.84 to rally to 119.67 in late Asian trading.
Chinese exports fell by 5.5% y/y in August, which was slightly better than estimates of a 6.0% y/y drop. More worrying was the sharp drop in imports, which slumped by 13.8% m/m in August against estimates of an 8.2% fall. The bigger-than-expected drop heightened fears of a slowing consumer demand in China.
Data from Japan was more positive with the second estimates of GDP showing that the economy contracted by less-than-expected in the second quarter of the year. GDP fell by 0.3% in the second quarter versus initial estimates of a 0.4% contraction. Japan’s latest current account data was also positive with the current account surplus rising by more than expected to 1.8 trillion yen.
However, the figures had little impact on equities with Tokyo’s Nikkei 225 Index closing down by 2.4%. Shares in China performed better though with the main indices, gaining around 2% in late Asian trading.
In Australia, the latest NAB survey came in mixed. The NAB business conditions index rose to 11 in August from six previously, but business confidence continued to suffer on China worries with the index falling to one in August from four. The aussie was stronger against the dollar on Tuesday, climbing to 0.6972 in late Asian session.
The pound extended Monday’s gains against the dollar on bargain hunting, ending nine straight days of losses. Sterling rallied to 1.5388 dollars before easing slightly to 1.5348 dollars. Meanwhile, the euro dropped to 0.7291 against the pound.
German trade data was also published today, which showed German exports rising by 2.4% in July against estimates of 1.0%. This was the fastest rate since December 2013 and reverses the 1.0% fall seen in the previous month.
Looking ahead to the rest of the day, it will be another relatively quiet day in terms of data. The second estimates of eurozone second quarter GDP growth will be the main data out of Europe. No revision is expected to the 0.3% q/q growth recorded in the initial estimate. In the US, the Labor Market Conditions Index for August will be the data of interest.