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    China trade data comes in mixed

    Market Brief

    G10 Advancers and Decliners vs USD
    JPY 0.26
    SEK 0.17
    EUR 0.13
    DKK 0.13
    NZD 0.07
    CHF 0.02
    NOK -0.20
    CAD -0.20
    GBP -0.21
    AUD -0.26
    Global Indexes Current Level % Change
    Nikkei 225 Index 16830.92 0.93
    Hang Seng Index 21322.16 -0.09
    Shanghai Index 2933.26 -0.09
    FTSE futures 6258.5 -0.15
    DAX futures 10255 -0.32
    SMI Futures 8193 -0.12
    S&P future 2109.6 -0.03
    Global Indexes Current Level % Change
    Gold 1250.8 0.55
    Silver 16.57 1.08
    VIX 14.05 2.9
    Crude wti 50.45 0.17
    USD Index 93.78 -0.05

    China trade data come in mixed

    Risk appetite was mixed in the Asian session following a tepid US close and news the World Banks cut global growth forecast for the next three years. The Shanghai composite and Hang Seng are both trading lower at -0.29% and -0.25% respectively. The Chinese weakness can be attributed to the soft export data, calling in question recent evidence of stabilization. USD was marginally weaker against G10 and EM currencies but loses were well within recent ranges. USDJPY bearish moment continued, after reversal off 107.92 high, declining to 106.72. The JPY was supported by good growth data that was revised higher. Japans 1Q GDP increased 0.5% q/q vs. 0.4% prior read. While Japan Q1 recorded a current account surplus of Y1.8785tln, against Y2.3189tln expected. Data also indicated that Japanese investors were net buyers of foreign securities by ¥2.7582trn. Commodities firmed, led by oil trading near is 10 month high as US crude stocks declined and by concerns about attacks on Nigeria's production, Brent crude reaching $51.5/bbl. The effect was mixed on commodity linked currencies as AUD continued to adjust to a less dovish RBA, yet CAD and NZD gained against the USD. AUDUSD bounded around the 0.7430 to 0.7467 range, yet upside looks capped by 65d MA at 0.7491. Finally, Hillary Clinton declared herself the Democratic party’s nominees for US president with fresh primary wins.

    China trade data disappointed as exports fell more than anticipated as external demand conditions remains weak. However, imports provided a bright spot beating expectations, indicated that potentially China growth machine was starting to grind. Chinas exports contracted 4.1% y/y in May against -4.0% expected. China’s import growth continued the positive trend contracting merely -0.4% y/y in May against -6.8% expected and -10.9% prior read. After a weak April, growth in major commodity imports rebounded. Overall, the data paints a mixed picture, with domestic continues improving while external environment remains soft and uncertain.

    On the data front traders will be watching UK industrial productions which are expected to indicate further weakness in manufacturing. Domestic PMI data contracted below the 50 threshold in April, external demand remains subdued while the risk overhang of the referendum on EU membership have all contributed to the sectors continued weakness. Industrial production is expected come in flat from 0.3% m/m (-0.4% vs. -0.2% y/y). We anticipate Manufacturing production will decline -0.1% from 0.1% m/m. Ahead of the “Brexit” vote we don’t anticipate GBPUSD to break sideways range 1.4732 200d MA and 1.4353 100d MA. Elsewhere, we will see Switzerland inflation data, Canadian housing start and US JOLTs jobs opening.

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