Forex Marketz Daily Forex News – Fully Markets Update
China, within the last hour, released trade data and the numbers surprised by tumbling in the month of March. This is not a good sign for Wednesday’s gross domestic product (GDP) release for the first quarter of 2015.
Annual Exports fell off 14.6 percent for the month of March. This official release comes from China’s National Bureau of Statistics. The report cites weakening global demand and the impact of the Lunar New Year for the drop off. In March we saw a 12 percent rise after a 48.3 percent jump higher in February. Imports also fell off. This number contracted 12.3 percent. We had expected a contraction of 11.7 percent. Last month we saw a 20.5 percent decline. The trade surplus is now at $3.08 billion higher, short of the expected $43.8 billion total number.
What were the immediate results? The AUD/USD halted a weeklong rally. The AUD fell from $0.7664 to 0.7630. The stock markets showed little change. The Shanghai Composite was up 1.1 percent and the Hang Seng was up 0.4 percent.
This data was closely watch as it is typically a barometer for the first GDP reading for Q1. Usually it is not affected by the Lunar New Year as that skews what we see in January and February. The real problem with this trade data, is that China does not like revisions. This is a slap in Beijing’s face. The 45 percent number from last month was way overstated. This report could be a miss by being under the actual number. This supports some economist’s beliefs that China’s data is never quite what it seems.
The weak external environment has not supported China’s economic growth. This has been going on for several years. We also note a weak property market and soft domestic consumption. The People’s Bank of China (PBOC) is aware of this and has made moves to spur economic growth and domestic demand. They cut the reserve ration requirement (RRR) for commercial banks in November and slashed rates twice this year.
Later this week we will be watching the release of the Q1 GDP. We expect their economy to grow at seven percent on an annual basis. Beijing has set its growth target for around seven percent this year. We say 7.4 percent growth in 2014.
