AUD : Outlook Brighter on Strong Chinese Exports
(Thu, 7 May 2020). The Australian Dollar is advancing, and could well extend its gains, after news that China’s exports rose unexpectedly last month. The AUD is seen widely as a proxy for the Chinese economy as China is a major market for Australian exports. The Australian Dollar is gaining ground Thursday and its advance could well extend further after news of a surprise increase in Chinese exports in April. They climbed by 3.5% year/year, compared with the 15.7% fall predicted, marking the first rise so far this year.
That boosted AUD as the two countries are tied closely together by trade, making the Australian Dollar a useful proxy for China’s economic health. Moreover, the advance came despite accompanying news that China’s imports in April were down by 14.2% year/year – more even than the 11.2% forecast.
The release of China’s numbers came as the US and China continue to argue about both trade and the source of the coronavirus pandemic. US President Donald Trump said Wednesday that he would report in a week or two on whether China is fulfilling its obligations under a Phase 1 trade deal the two countries signed in January before the coronavirus spread globally.
Meanwhile, from a technical perspective, AUD/USD faces little resistance ahead of the April 30 high at 0.6570, which looks like a reasonable medium-term target.
GFS ASIA TEAM
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