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EU Market Outlook - China Trade Data Unbalanced

Last updated 7/10/2012 1:36 AM EST (GMT -5) 0 Comments - Add your comment

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Andrew Taylor

Market Strategist, GFT

Follow @ATaylor_GFT

Top Headlines

o    China trade balance > unbalanced according to the market

o    NAB Business Confidence down but Conditions seen to be better than expected

o    High Spanish bond yields not enough for EU decisive action

o    Market Moves:

·          EUR/USD holds above 1.2280; AUD/USD holds above 1.0160

·          Commodities stable post Chinese Trade data

·          ASX2 00 testing 4090

Asian markets were trading lower Tuesday as Trade Data from China confirmed weakness across both its Import and Export markets. The actual net balance saw a big increase from Mays 18.7 B surplus to 31.7B in surplus. Exports beat expectations increasing 11.3% (YoY) vs 9.9% expected and a decent miss on Imports which increased 6.3% against 12.7% forecast.

Markets decided to brush aside the fact that they pocketed 31.7 Billion dollars last month plus the fact that demand from offshore for Chinese goods remained healthy. Traders instead decided to focus on the Import miss, placing more importance on the decrease in domestic demand over the export positives. This may see initial moves lower reversed as the PBoC have taken steps recently to combat this very concern along with infrastructure and labour programs currently underway.

Outlook

European markets are expected to open fairly close to where they left off yesterday. Spanish and Italian borrowing costs will again be in the spotlight as the EU finance ministers meeting produced little by way of progression post EU Summit. With global sentiment remaining cautious pressure will remain to the downside.

Economic Events to watch:

0645 FR           May Industrial Production

0800 IT             May Manufacturing Production

0830 UK           May Industrial Production

0830 UK           Trade Balance

0830 UK           May Manufacturing Production

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About The Author

Andrew Taylor's financial markets career started in 1991 in the interbank FX market,where he worked for one of the largest banks in Australia. Andrew then went on to trade on behalf of some of the biggest global banks, working across five of the world's major financial hubs: Sydney, New York, Singapore, Auckland, and Tokyo.

His more than 20 years of experience spans market borders and asset classes, covering global equities, commodities, options and futures. Andrew's wealth of trading experience and ability to communicate with traders of all levels has put him in demand as a first point of contact for clients and the media alike when seeking information and guidance.