Disappointing Chinese data weighs on the AUDUSD

March 10, 2014 in Forex Fundamentals and News

Data out of China has been fairly lack-luster these past few days.

Struggling solar equipment producer Chaori Solar defaulted on an interest payment due on its bonds on Friday, marking China’s first onshore bond default.

In a shock to global markets, Chinese exports during February fell by 18.1%, massively falling short of the consensus for a 6.8% rise. Though the Lunar New Year holidays were partly to blame, the size of the miss unnerved forex and commodity markets, and raised apprehensions of a slowdown in the country, said to be a global engine of growth. The deceleration was the most observed after the global financial crisis, and accompanied by disturbing figures on inflation and producer prices, which fell to new lows.

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China’s imports, however, were higher in February by 10.1%, leading to an unusually large trade deficit of $ 23 billion. Analysts expected imports to rise by only 7.6%, and the trade deficit at a surplus of $ 14.5 billion.

In data released today, Chinese bank lending in terms of new yuan loans fell by 50% compared to January, raising fears that a liquidity crisis had gripped the economy. However analysts said the fall should be read in the context of a huge surge in January before the New Year holidays. Bank loans aggregated 644.5 billion yuan in February, according to the People’s Bank of China, compared to 1.3 trillion yuan in January, and the consensus expectation of 716 billion yuan.

chinese-new loans

According to another view, the lower lending was an outcome of China’s efforts to crack down on its shadow financing system through hikes in the bank rate.

One casualty of the unimpressive Chinese data was the AUDUSD, which fell in recent sessions in response. China is Australia’s most important trading partner.

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