CHINA DATA: Exports & Imports Below Forecasts, Exports To US Fall Further
Jun-09 03:26
China's May trade data saw recent trends broadly maintained, while outcomes were slightly below market expectations. Exports were 4.8%y/y, against a 6.0% forecast and 8.1% prior. Imports fell -3.4%y/y (versus -0.8% forecast and -0.2% prior). This left the trade surplus at $103.22bn, above April's outcome ($96.18bn) and the market consensus of $101.1bn.
- Trade with the US remains a focus point, with exports now down to $28.82bn, versus levels close to $49bn at the end of last year. This a -34%y/y outcome, per Bloomberg. Exports with other parts of Asia were mostly down a touch in May.
- Offset came from exports to the EU, up to $49.50bn from $46.71bn prior. Most individual EU countries saw a rise. Exports to the UK were yup to $7.46bn from $6.92bn and to Brazil, $6.45bn from $5.72bn.
- The trade surplus with the US eased to $18.01bn, from $20.46bn. To the EU it was steady at $26.62bn from $26.67bn. With parts of Asia, China's trade position was little changed from April levels.
- On the import side, volumes for commodity imports were mostly down, except for soybeans and natural gas. Coal, crude oil and iron ore were all off April levels.
- Focus will be on US-China trade talks alter today in London, although trends still slowed in May in terms of exports to the US, even with lower tariff levels agreed to at the meting in Geneva.
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MACRO OUTLOOK: US PPI/Retail Sales And Powell Follow On Thursday [2/2]
May-09 20:17
- Core PCE implications will then be watched closely in Thursday’s PPI report, and we expect with additional focus on portfolio management after last month’s huge upward revision to February.
- Retail sales, whilst only reported in nominal terms, will offer a keenly awaited look at consumer behavior.
- Real spending moderated to 1.8% annualized in Q1 after 4.0% in Q4 despite likely tariff front-running, with April a good test of how much discretionary spending was pulled forward.
- Finally, Powell provides “Opening Remarks” at the Second Thomas Laubach Research Conference, although he’s allotted twenty minutes so there is scope for more substantive remarks than you’d usually expect. His message at Wednesday’s FOMC press conference was one firmly of being in no hurry to cut rates amidst huge uncertainty. He also appeared to put more weight on hard data over soft indicators that appear more stagflationary in nature.
MACRO OUTLOOK: US CPI Offers Look At April Tariff Distortions on Tuesday [1/2]
May-09 20:15
- The week’s US data calendar is highlighted by CPI inflation on Tuesday although PPI inflation and retail sales reports on Thursday are in close second. All three releases are going to be important, offering further hard data for April in the first month under reciprocal tariffs. What’s more, PPI and retail sales are followed by Fed Chair Powell just ten minutes after their release (more on that below).
- Core CPI inflation is seen accelerating to 0.3% M/M in April, with six unrounded estimates we’ve seen to date averaging 0.27% M/M.
- A potential for a ‘low’ 0.3% aside, it’s still likely a swift acceleration from a particularly soft 0.06% M/M in March which was in large part down to surprisingly abrupt declines in lodging away from home (-3.5%) and airfare (-5.3%) prices.
- This lodging weakness carried over to core PCE inflation back in March, at just 0.03% M/M after a particularly strong 0.50% M/M in February in a large wedge with core CPI at 0.23% M/M.
- Markets currently price a next Fed cut with the September FOMC meeting.
USDCAD TECHS: Pressuring Resistance
May-09 20:00
- RES 4: 1.4296 High Apr 7
- RES 3: 1.4111 High Apr 4
- RES 2: 1.4041 50-day EMA
- RES 1: 1.3943 High May 9
- PRICE: 1.3930 @ 16:06 BST May 9
- SUP 1: 1.3751 Low May 6
- SUP 2: 1.3744 76.4% retracement of Sep 25 ‘24 - Feb 3 bull run
- SUP 3: 1.3696 Low Oct 10 2024
- SUP 4: 1.3643 Low Oct 9 ‘24
USDCAD has recovered from its recent lows. Despite the recovery, the trend condition remains bearish and short-term gains are considered corrective. A fresh cycle low on Tuesday reinforces the bearish theme. Potential is seen for a move towards 1.3744, a Fibonacci retracement. Note that moving average studies are in a bear mode position, highlighting a dominant downtrend. Key resistance is seen at 1.4041, the 50-day EMA.
