Will step up support measures
Fundamental Forex Analysis

Surplus – a big beat as imports plunge 16.7%

The China customs published Trade Balance for May in USD terms, reporting a bigger-than-expected increase in the trade surplus amid a sharp plunge in the imports.

In USD terms,

Trade Balance (USD) came in at +62.93B versus +39.0B expected and +45.34B previous.

Exports (YoY): -3.3% vs.-7.0% exp. and +3.5% last.

Imports (YoY): -16.7% vs.-9.7% exp. and -14.2% last.

The imports slump marked marking the sharpest decline since January 2016.

Market implications

The small-than-expected drop in exports is positive for the Chinese economy. Although a collapse in the imports could prompt some further policy support to boost the domestic consumption. Most global economies closed borders for trade due to the coronavirus-imposed lockdown.

The mixed data is unlikely to have a major bearing on the Chinese proxy, the AUD. The AUD/USD pair settled the week below the 0.7000 level.

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