When is China trade balance and how could it affect AUD/USD?

China's Trade Balance Overview

China’s General Administration of Customs is set to release July month trade balance figures sometime during early Thursday. Considering the influence Chinese data have over antipodeans, coupled with the recent market behavior on the US-China trade dispute, today’s trade data becomes the key for commodity-linked currencies.

Forecasts suggest a decline in Trade Balance figures to ¥227.289 billion from ¥93.57 billion. Further, Exports are expected to have weakened by 2.9% versus 6.1% whereas Imports are likely to register 1.7% expansion over -0.4% previous on YoY basis.

In a case of Trade Balance in the US Dollar (USD) terms, the surplus might soften to $40.00 billion from $50.98 billion prior while exports and imports both are likely to mark further weakness to -2.0% and -8.3% compared to -1.3% and -7.3% respective priors.

TD Securities spread a measured noted concerning the data before its release:

For today's trade data, we expect stabilization in exports thanks to better recent regional indications (TD +2.1% y/y, mkt -1.0%), though this may be temporary, due to front-loading related to the Japan-Korea dispute. Imports are still expected to contract (TD -5.0%, mkt -9.0%), though at a lesser rate, which is China growth-positive. We are more constructive than consensus, but the recent tariff increase from the US introduces future risk.

How could it affect the AUD/USD?

Pessimism surrounding the US-China trade deal continues to weigh on the Aussie while further disappointment from the largest customer can increase chances of additional rate cuts by the Reserve Bank of Australia (RBA). As a result, any deterioration in headline economics from China can add further weakness to the Aussie.

While an upbeat report can help the Aussie extend its latest recovery towards 0.6800 and June month low surrounding 0.6831, sluggish data can quickly fetch the quote below Monday’s low of 0.6748 and can target 0.6684/77 region including recent low and January month bottom.

Key Notes

AUD/USD moves little to 0.6760 ahead of Chinese trade data

AUD/USD Analysis: bullish correction to be confirmed on a recovery above 0.6810

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 a trade surplus, while a negative value shows a trade deficit. It is an event that generates some volatility for the CNY. As the Chinese economy has an 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.