Technical Bias: Bearish
- AUDUSD plunges 1.1% as China trade numbers miss expectations.
- China exports fell 15% in March vs. expectations for a 12% gain; imports fell 12.7% vs. expectations for an 11.7% drop.
The AUDUSD plunged more than 1 percent on Monday, as Australia’s biggest trade partner posted a narrow trade surplus as both exports and imports declined.
The AUDUSD bottomed out at 0.7553. It would subsequently consolidate at 0.7583, declining 1.1 percent. That was the pair’s lowest level since early-April. The AUDUSD tested the initial support of 0.7551. On the upside, initial resistance is likely found at 0.7723. The technical indicators are showing a negative bias, as the AUDUSD continues to drift well below its long-run averages.
The AUDUSD traded heavily in the Asian session after China’s National Bureau of Statistics posted dismal trade figures for March. China’s exports plunged at an annual rate of 15 percent in Mach, raising fresh fears of an economic slowdown in the world’s second largest economy. Imports also fell 12.7 percent in the 12 months through March, official data showed. The resulting trade surplus shrank to $3.08 billion from $60.6 billion.
A median estimate of economists called for exports to rise 15 percent and imports to drop 11.7 percent, leading to a trade surplus of $45.35 billion.
Weak trade figures bolster expectations for further monetary easing by the People’s Bank of China, which has already adjusted policy to avoid the deflationary cliff. Weak inflation, falling house prices and weaker international trade have all weighed on Chinese GDP. Signs of a slowdown first emerged last year when the economy grew at its slowest pace in 24 years.
China’s GDP grew 7.4 percent in 2014, barely missing the official target of 7.5 percent. As a result, Beijing has downgraded its 2015 outlook to ”around 7 percent,” its lowest in 11 years.