Exports contract for a fourth month
Data released at the weekend showed China’s exports fell 1.1% y/y in November, the fourth consecutive month of negative growth. It is evident that the 18-month tariff war with the U.S. is taking its toll on China’s export sector and could imply that they may be more ready to get a Phase 1 deal signed off as soon as possible. That might be construed as positive for risk, but the headline data is dominating sentiment for the time being.
AUD/USD Daily
Imports came in better than expected, rising 0.3% y/y versus the -1.8% expected and as a result the trade surplus narrowed to $38.7 billion. The Australian dollar was buoyed by the U.S. payrolls data but has started the week in the red after the poor China trade data.
The weak imports growth being one of the driving forces. The 55-day moving average looks poised to rise above the 100-day moving average at 0.6810 for the first time since February 8.
Equities stutter after payrolls rally
China A50 Daily
U.S. equity indices were on the defensive during today’s Asian morning session after posting significant gains on Friday. U.S. futures were down between 0.14% and 0.16% while the China A50 index lost 0.55% after the disappointing exports data at the weekend. That was the first negative day in five days and halted the index’s recent rally just short of the 55-day moving average at 13,859.
Fed on hold for longer
Friday’s stellar payrolls data virtually consigned this week’s FOMC deep into the non-event bin, with the only change expected from the last meeting being a possible more-hawkish bias to the accompanying statement. Money market pricing now implies a zero percent probability of a cut on Wednesday, and we have to look as far as September 2020 for the probability of a cut to shift above 50%, according to calculations by Bloomberg.
German trade data on tap
Today we see the trade balance for Germany for October. Exports are expected to fall 0.3% from a month earlier, with imports seen down 0.1%. The overall surplus is expected to narrow to €19.0 billion from €19.2 billion in September. The only other item of note is the Eurozone’s Sentix investor confidence reading for December. That’s expected to slide to -4.9 from -4.5. There are no major U.S. releases scheduled for today.