China gains less in exports last month
Growth pace for Chinese shipments abroad decelerated last month to 10% YoY, from the previous 21.8% YoY growth in February. Meanwhile, imports rose sharply to a growth at 14.1% YoY in March, leading to the unexpected trade deficit at USD880 million.Source: Bloomberg, FXPRIMUS Click the image to enlarge
From the chart below, we can see that deteriorating exports also brought the country’s trade balance to a 13-month low. It could deteriorate further given that demands in the U.S. and Euro Zone stay weak in the near term.Source: Bloomberg, FXPRIMUS Click the image to enlarge
The sharp dip in Chinese trade growth raised skepticism on inflated exports prints in the first two months this year, and raised concern on the suitability of the recent Chinese economy. More importantly, the Yen’s depreciation (aimed at reflation) also threatens Chinese exports, negatively affecting China’s Gross Domestic Product (GDP) in 2013.
China’s policy tightening fears might ease further as H7N9 trims demand
A lower Consumer Price Index (CPI), together with the recent H7N9 outbreak in the Eastern part of China, might limit the space for Chinese officials to tighten monetary policy, since food prices may stay in a lower range.
The graph below clearly indicates the recent sharp drop for food and pork prices. The drop is due to various animal related diseases, such as H7N9 and dead pigs floating in a few rivers.Source: Bloomberg, FXPRIMUS Click the image to enlarge
CADJPY – Coming support at 97.20
As I mentioned yesterday, the aggressive Bank of Japan (BoJ) “money base” targeted easing measures largely cap the further upside of the JPY. The 25-Delta one-month risk reversal for the USDJPY rebounded sharply in past days, indicating that demand for out-of-the-money (OTM) strikes is higher.Source: Bloomberg, FXPRIMUS Click the image to enlarge
I remain with the support level at 97.20 for the CADJPY in the near term, based on the H1 chart.Click the image to enlarge
Previous Daily Market Report: Daily Market Report for 9 April 2013: China Lowers Consumer Price Index (CPI) Easing Worries On Tightening