Australian Dollar Weakens as Chinese Exports Plummet

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  • Australian Dollar Softened by Chinese Data – Slump in exports stokes slowdown fears.
  • Pound Muted Ahead of Brexit Vote – Investors brace for key Commons vote.
  • US Dollar Buoyed by Chinese Data – Safe-haven demand surges on slowdown signs.
  • Euro Dented by Recession Fears – Weak Eurozone factory data drags on sentiment.

Australian Dollar Slides on China Concerns

The Australian Dollar trended lower at the start of this week’s session, driven lower by the release of China’s latest trade figures. The data revealed a sharp drop in Chinese imports and exports last month, which on top of boding poorly for the Australian-China trade relationship, also stoked fears of an imminent slowdown in China’s economy.
Looking ahead to today’s session, the ‘Aussie’ may trade in a wide range, with international developments potentially further diminishing market risk appetite.
Pound Steady Ahead of Key Vote

Ignoring a small spike at the start of the session, the Pound remained largely rangebound on Monday as markets awaited a key vote to determine the fate of the UK government’s Brexit deal. The last day ahead of the vote saw UK PM Theresa May pleading to MPs to back her deal ‘for the country's sake’.
The vote itself is set to take place overnight on Tuesday and is expected to result in considerable volatility for the pound if the deal is rejected as expected.
Euro Damped by Recession Fears

The Euro was muted yesterday, with the single currency dented by the release of some gloomy industrial figures from the Eurozone. The data revealed a sharp slump in factory production across the bloc in November, leading markets to shun the Euro amid mounting concerns that some of Europe’s largest economies may have contracted at the end of 2018.
EUR investors will be on the lookout for a speech by European Central Bank (ECB) president Mario Draghi later tonight, with any signs that the recent slowdown in the Eurozone may have dampened Draghi’s outlook for 2019 likely to weaken the Euro.
US Dollar Buoyed by Chinese Trade Disappointment

The US Dollar firmed on Monday, making particular headway against its more risk-sensitive peers as China’s lacklustre trade data saw investors flock to the safe-haven US currency. However these gains were clipped later in the European session as Trump promised to reach a trade deal with China.
Coming up overnight on Tuesday will be the release of the latest US PPI figures, with an expected slide in producer prices potentially limiting the appeal of the US Dollar.
Canadian Dollar Flat as Oil Falls Back Below $60

The Canadian Dollar was muted yesterday, with the oil-sensitive currency finding limited support as the Brent Crude fell back below $60 a barrel on fears that a slowdown in China will limit global consumption.
This trend may persist through today’s session as well, with the absence of any notable domestic data likely to see movement in oil prices continue to drive demand in CAD.
New Zealand Dollar Dented by Risk Aversion
The New Zealand Dollar was also undermined by Chinese slowdown concerns at the start of this week, with NZD exchange rates weakening as market risk appetite dipped.
Driving further movement in the New Zealand Dollar during Tuesday’s session may be the latest global dairy auction, with a rise in prices likely to reflect well on the ‘Kiwi’.

Data Released

January 15th 20:00 EUR German Full Year GDP 2018 1.5%
January 15th 21:00  EUR Trade Balance €13.7bn
January 16th 00:30 USD PPI -0.1%
January 16th 01:30  NZD Global Dairy Auction 
January 16th 02:00  EUR ECB Draghi Speech 
January 16th 06:00 GBP  Parliamentary Brexit Vote

Post by TorFX

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