China’s trade data released over the weekend showed a huge drop in exports which has further heightened concerns about a slowdown in the world’s second biggest economy.
The ANZ wrote in a note to clients over the weekend that:
“China’s exports growth crashed in February, dropping by 18.1% y/y, compared with 10.6% gain in January, as China intensified the efforts, especially by introducing two-way fluctuation in RMB exchange rate, to curb the suspicious capital inflows embedded into the foreign trade via export over-invoicing and round-tripping.”
The impact has already been felt in Forex markets with the Aussie dollar siting at 0.9032 this morning from a close of 0.9065. This is a full cent below the high on Friday before the stronger-than-expected non-farm payrolls in the US.
Australian data will be important this week but concerns, or not as it may end up being the case, about Chinese growth are likely to dominate the open to the trading week today.