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Asian Session – China trade falls less than expected; Dollar back above 118 yen

Trade data out of China today surprised on the upside as both exports and imports fell less than expected in December. Exports declined by 1.4% year-on-year in December, far above expectations of an 8% drop. Imports also fared better than expected, falling by 7.6% year-on-year versus estimates of an 11.5% drop. For the year as a whole, exports declined for the first time since 2009 but December’s figures may be a sign that the economy is stabilizing.

Markets cheered the data with Asian stocks rising sharply and Tokyo making gains of around 3%. However, shares in China reversed earlier gains to head lower by late Asian trading.

The Australian dollar, which is considered as a liquid proxy for China’s economy, briefly spiked up to 0.7048 against the US dollar but had eased to 0.7022 in late Asian session. The New Zealand dollar was also firmer after the data and was last trading at 0.6563 against the greenback.

The yen lost ground against major currencies on improved risk sentiment. The dollar moved back above the 118 level and was last trading at 118.11 yen. The euro and the pound also rose against the Japanese currency, climbing to 127.88 yen and 170.51 yen respectively in late Asian session.

The euro was weaker against the greenback but held above the 1.08 handle and was last trading at 1.0816 dollars. Meanwhile, the pound managed to recoup some of yesterday’s losses as it advanced to 1.4436 dollars from yesterday’s low of 1.4351 dollars.

Oil prices opened higher on Wednesday after a seesaw session on Tuesday that saw prices briefly rising above $32 a barrel before hitting a fresh 12-year low below $30 a barrel. US crude futures were trading around $31 a barrel in late Asian session today.

In other commodities, gold prices extended their slide for a fourth day and were last down at $1080.53 an ounce.

Coming up later today, Eurozone industrial production figures for November will be watched closely in the European session. But the US session is expected to be relatively quiet with no major data releases.

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