Australian Dollar Sold As Chinese Trade Balance Unexpectedly Improves

By Eric Andersen,

THE TAKEAWAY : Chinese Trade Balance Showed $5.35B Surplus in March vs. -$31.48B in February > Traders Surprised by the Increase Sold the AUD as Hopes for PBOC Stimulus Faltered > AUDUSD Fell

Data released by the China Economic Information Network showed the country’s trade balance unexpectedly rose to $5.35B in March, up from -$31.48B the previous month. The market had expected a trade deficit of -3.15B this month, so analysts were surprised by the release which painted a rosier image of the Chinese economy.

The unanticipated surplus cut traders’ expectations that the People’s Bank of China would provide stimulus to an economy that has been slowing in growth over the past few months. A slowing Chinese economy would hurt demand for foreign imports, such as those originating in Australia. A flagging Aussie export sector would suggest room for the Reserve Bank of Australia to reduce interest rates.

Following the release, the Australian Dollar fell under significant selling pressure, falling from 1.0355 to as low as 1.0306.
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Original Article: http://www.dailyfx.com/forex/market_alert/2012/04/10/Australian_Dollar_Sold_as_Chinese_Trade_Balance_Unexpectedly_Improves.html

DailyFX is the forex news and research arm of FXCM (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.