AUSTRALIA DATA: Surplus Widens But Some Concerning Details
The deterioration in the merchandise trade surplus appears to have stabilised. A small narrowing was expected in October but it actually widened to $5.95bn from $4.53bn as exports outpaced imports. But some of the details were soft with capital goods imports declining for the third straight month, exports weak to China and commodity export volumes generally lower.
Australia merchandise exports vs imports y/y% 3-mth ma
Source: MNI - Market News/ABS
- Goods exports rose 3.6% m/m in October but are still down 9.2% y/y after -10.2% y/y. The strength was driven by other mineral fuels and non-monetary gold. Rural goods fell 0.5% m/m and 3.7% y/y after -5.9% y/y.
- October commodity prices were higher on the month across the board, especially for iron ore. But higher prices weighed on export volumes with only semi-soft coal and LNG rising.
- Exports to Australia’s two largest destinations remain weak with shipments to China down 21% y/y in October and to Japan -15.1% y/y, while they’re robust to less important markets such as the US, UK, Indonesia and NZ.
Australia merchandise exports to China y/y%
Source: MNI - Market News/ABS
- Merchandise imports rose 0.1% m/m to be down 3.1% y/y after -2.8% m/m & -7.5% y/y in September. Both consumer and intermediate goods saw solid monthly rises of 0.8% and 1.7% respectively, while capex fell 2.1% m/m.
- The increase in consumer imports was due to non-industrial transport equipment. In terms of investment, machinery & telecoms equipment were weak.
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CHINA: CAIXIN PMI Services Stronger for October.
- Today’s CAIXIN PMI Services came in at 52.0 for October
- This was a rise from September’s release of 50.3.
- Following the release earlier in the month of the CAIXIN PMI Manufacturing at 50.3, the resulted in composite rising to 51.9 from 50.3.
- The results are consistent with recent data which indicates that the impact of the various stimulus packages are starting to show up in the broader economy.
- The CAIXIN PMI Survey covers small and medium sized businesses and therefore is considered a more reliable indicator of the performance of China’s private sector.
AUD: Aussie Range Trading Ahead Of RBA & US Election
AUDUSD is little changed during APAC trading today with the RBA decision coming up and Americans about to go to the polls. The pair is around 0.6590, close to the intraday high after a low of 0.6579. Commodities are down moderately and equities are generally lower. The US dollar is slightly higher.
- AUDJPY is 0.1% higher at 100.30, close to the intraday peak. AUDNZD has trended gradually up and is around 1.1028. AUDEUR is up slightly at 0.6057 and AUDGBP +0.1% to 0.5086.
- Equities are selling off with the ASX down 0.5% and Hang Seng -0.4% but Nikkei up 1.1%. The S&P e-mini is off its lows to be down slightly Oil prices are flat with WTI at $71.45/bbl. Copper is up 0.1% and iron ore remains around $104-105/t.
- The RBA decision is coming up at 1430 AEST with Governor Bullock’s press conference at 1530 AEST. The Board is unanimously expected to leave rates at 4.35% but the statement and updated staff forecasts will be scrutinised for any changes in view (see RBA Preview here).
- Later US October services ISM/PMI and September trade print, as well as UK October services/composite PMIs. The eurogroup meeting continues and the ECB’s Lagarde and Schnabel speak.
STIR: RBA Dated OIS Little Changed Ahead Of RBA Policy Decision
RBA-dated OIS pricing is little changed today. However, the pricing for 2025 meetings remains 1-7bps above pre-CPI levels from last Wednesday.
- The market has 2bps of easing by year-end, with an 8% probability assigned to a 25bp rate cut at today’s meeting.
Figure 1: RBA-Dated OIS – Today Vs. Yesterday
Source: MNI – Market News / Bloomberg
