GBP/AUD Falls in Quiet Day for UK and Australian Data, Chinese Ecostats Disappoint

Modified: Monday, 8 June 2015 16:41 BST - Written by Frank Davies

STORY LINK GBP/AUD Falls in Quiet Day for UK and Australian Data, Chinese Ecostats Disappoint

Chinese Trade Data Causes GBP/AUD Movement

The Pound slipped against the ‘Aussie’ on Monday in a quiet day for both the UK and Australia by way of domestic data. However, China released some ecostats earlier on Monday which have influenced the Australian Dollar somewhat. China’s economic weakness has caused some major market concerns as well as being a drag on the ‘Aussie’ exchange rate as the nation is Australia’s largest trading partner. Monday saw China record import declines for a seventh consecutive month, while exports also registered a fall. The data will be disappointing to those in the Chinese government and central bank which have attempted to spur growth with stimulus measures on numerous occasions. However, the Chinese trade surplus jumped to near-record highs in May.

Economist Zhao Yang stated: ‘The deepening of the import contraction, despite stronger commodity prices in May, suggests that domestic demand is particularly weak, which contributed mainly to the strong trade surplus. We believe China’s monetary policy still needs to be accommodative to support domestic demand.’

Some economists have attributed a drop in imports to lower commodity prices and a stronger Chinese currency.

ANZ stated: ‘In our view, both consumption and investment are bound to pick up in Q2 and Q3 on fast implementation of fiscal policy and much eased monetary policy. Thus, we may see a modest pick-up in Chinese imports soon.’

AUD Volatility to be Inspired by Australian Home Loans Data

The Australian Dollar is likely to have a more interesting day on Tuesday with the release of Australian Home Loans and Investment Lending data. Australian Home Loans are expected to contract by -2.0% in April after an upbeat 1.6% March reading. Additionally, Tuesday will see the release of Chinese Consumer Price Index data. The level of inflation is pegged to decline from 1.5% to 1.3% in May on the year and could be an event to pressure the Chinese currency lower and potentially dragging the ‘Aussie’ exchange rate down with it.

UK Trade Numbers Ahead, GBP Movement Likely

Meanwhile in the UK, Monday’s been a quiet day for data. However, Tuesday’s set to be a little more influential with the release of trade balance ecostats. Total Trade Balance, Visible Trade Balance and Non-EU Trade Balance data will all be released early in Tuesday’s session and could cause moderate movement in the market. Wednesday will continue on with the UK data stream with the release of UK Industrial Production and Manufacturing Production stats.

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