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China’s data the focus

Published August 6, 2018

Author: Dennis Li

After China released the new retaliatory tariffs last Friday on US goods the AUD recovered most of its losses from Thursday and starts the new week just below 0.7400 against the USD (the seventh Monday in a row). The RBA is expected to hold interest rates steady at its meeting tomorrow whilst Chinese trade data on Wednesday  and CPI data on Thursday could bring some volatility. A fall in the EUR coupled with the rally on the AUD has seen a solid improvement in the cross rate to around 0.6385.

  • Last Friday, China’s finance ministry unveiled new sets of retaliatory tariffs on $60 billion of US goods in response to Washington’s recent potential increase in tariffs on $200 billion worth of Chinese goods.
  • US nonfarm payrolls increased by 157,000 job last month which was lower than expected while the drop in the unemployment rate to 3.9% reinforces the belief that the US labor market is tightening and putting upward pressure on salaries.
  • The US trade deficit recorded its biggest increase since November 2016 to $46.3 billion as the boost to exports from soybean shipments faded and higher oil prices lifted the import bill.
  • Besides the Chinese data this week, we will also see Japan and Britain’s GDP on Friday which would reflect the impacts on their economies from the intensifying global trade war.