China Trade Woes Mount 08.05.2015
Data released overnight showed that the popping of the property bubble in Chinese cities is impacting the growth prospects of the nation as imports and exports continue to slide. Although the trade surplus rebounded demonstrably in the latest reading, rising from $3.08 billion in March to $34.13 billion in April, the trend in imports remains to the downside. Imports slid -16.2%, outpacing expectations of a -12.0% contraction while exports declined -6.4% versus a forecast of 2.40% expansion. The slowdown in the local economy and lack of fiscal stimulus is seeing overcapacity directed towards the export markets just as the government considers adding stimulus measures outside of monetary policy. Economic expansion has fallen to its slowest pace in 24-years as the Government races to bolster growth.
The recently announced Saudi Arabian and Turkish partnership to arm Syrian rebels has stark implications for the growing list of conflicts in the Middle East as the Syrian civil war that has been waged for over 4-years hits a new plateau. Arming and training of rebel forces countering the Assad regime has been the primary focus with the new joint venture aimed at building an overland pipeline to supply energy to Europe. The latest moves have drawn the ire of Assad loyalists including Russia and Iran as they seek to maintain their strategic regional influence. Despite the major drawdown in US inventories, prices ticked back below $60 per barrel as production remains high and global fundamentals continue to decline.
The UK Conservative Party has secured a big win against the Labour Party, with the Tories presently seeing major gains over their peers. Other major winners in the latest elections include the Scottish National Party while the Liberal Democrats and Labour hemorrhaged seats. Labour Leader Ed Miliband is expected to step-down after the startling losses, which means David Cameron is likely to be reinstated as the next Prime Minister once he manages to cobble together a coalition unless he has the request number of seats to form a parliamentary majority. The kneejerk reaction in the Pound to the exit polls was substantial optimism with the Pound rising the most in a single session against the Euro since 2009. Major gains were also seen in the GBPUSD pair as the Conservative victory adds to optimism of further fiscal reforms.
NZDUSD Downward Trending Channel Trading Opportunity
Expectations of cuts to the key rate has sent the New Zealand dollar lower versus peers after the Central Bank warned of more dovish leanings to offset the decline in inflation. The latest remarks from US Fed policymakers is that September could be a reasonable time to raise rates, seeing momentum from the recent dollar slide reverse modestly. The equidistant channel technical pattern setting up in the NZDUSD pair has been steadily trending lower and exhibits a bearish bias. Optimal short positions are initiated at the upper channel line to be closed at the lower channel line. Any substantial disappointment in nonfarm payrolls due later today could see the NZDUSD pair breakout from the channel to the upside in a stark rebound from recent weakness.