China's Trade Balance worsens Monday night, China reported a Trade Balance of $56.53B for the month of October to mark its lowest balance since Febru
China’s Trade Balance worsens
Monday night, China reported a Trade Balance of $56.53B for the month of October to mark its lowest balance since February. Looking further, exports YoY declined 6.4% – nearly double the expected 3.3% decline. While often a mid-tier data point for other countries, China’s position as the world’s leading exporter caused markets to react strongly to the Trade Balance report.
AUD/USD slid over 50 pips in the hours following the data release while USD/JPY rose almost 40 pips. Both Japanese yen and Australian dollar are historically positively correlated with China’s economy given their geographic proximity and close trade relationships.
Zooming out, Chinese stocks (FXI) are down 10% year-to-date while US stocks (QQQ) are up 40% over the same time. US dollar has seen a rise both this week and throughout the year as Chinese stocks are generally negatively correlated with USD. Over a 3-month period there is a -0.3 correlation between the two (FXI/UUP).
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