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Daily Report: Aussie Lower After China Trade Data

Published 02/09/2015, 05:40 AM

Aussie opens the week lower trade data from China stoked growth worries. China trade surplus widened to USD 60b in January versus expectation of USD 48.2b. Exports dropped -3.3% yoy but imports tumbled sharply by -19.9% yoy, sharpest fall in over five years. Economists saw the substantial decline in import as result of lower commodity demand and commodity prices. Also, the set of data indicated weak domestic demand which could affect Australian exports. At the time of writing, AUD/USD is trading well above 0.7625 near term bottom in spite of today's fall. We'd maintain the view that the pair is staying in consolidation and expect choppy trading ahead, with risk of another rise, before down trend resumption.

In Eurozone, Greek prime minister Alexis Tsipras reiterated his stance on rejecting the international bailout extension ahead of this week's meeting with Eurozone finance ministers. Alexis noted that "it is the irrevocable decision of our government to honor the mandate of the Greek people and negotiate an end to the European Union’s austerity." Greek finance minister warned that "the euro is fragile, it's like building a castle of cards, if you take out the Greek card the others will collapse." Former US Fed chair Alan Greece said that Grexit is "inevitable". Meanwhile, UK Chancellor of Exchequer George Osborne said that UK is stepping up the preparation for a possible Grexit.

Latest CFTC data showed that on February 3, net short in Euro and Aussie continued to rise comparing to the prior week. Euro net short rose again to from 184.7k contracts to 196.3k, hitting another two year high. Yen net short dropped to 59.6k. Sterling net short dropped slightly from -45.3k to -42.4k. Swiss franc net short dropped to 5.4k. Canadian dollar net short was relatively unchanged at 27.3k. Australian dollar net short rose from 48.9k to 56.1k, hitting a one year high.

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Looking ahead, the economic calendar is relatively light today. Japan will release consumer confidence. Germany will release trade balance and Eurozone will release Sentix investor confidence. Canada will release housing starts. BoE inflation report will be a major focus in the week ahead. US retail sales, Eurozone GDPs and Australia job data will also be released. Here are some highlights:

  • Tuesday: Australia house price index; China CPI and PPI; Swiss unemployment, CPI; UK productions;
  • Wednesday: Australia home loans; Eurogroup meeting; US Fed budget balance
  • Thursday: Australia employment; BoE inflation report; US retail sales, jobless claims
  • Friday: Eurozone GDP, trade balance; US import price, U of Michigan consumer sentiment

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