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China’s exports were on fire in September! Will this result to an escalation of the U.S.-China trade war?

  • Business NZ manufacturing index slips from 52.0 to 51.7 in September
  • AU home loans slips by 2.1% vs. 0.9% dip expected, 0.0% previous
  • China’s trade surplus jumps to 213B CNY vs. 85B CNY expected, 180B CNY previous
  • China’s trade surplus (in dollars) widens from $27.9B to $31.7B in September
  • Japan’s tertiary industry activity up by 0.5% vs. 0.3% expected, -0.1% previous

Major Events/Reports:

China’s trade data

The biggest story of the hour is the world’s second largest economy printing its trade data for the month of September.

China’s trade surplus widened from $27.9B to $31.7B in September, which is not only better than the $19.4B that markets had expected, but also marks the largest surplus since June.

Turns out, exports jumped by a whopping 14.5% from a year earlier, the fastest growth since February, after already clocking in a 9.8% growth in August.

Meanwhile, inbound shipments rose by 14.3% against a 20% increase in August.

The most interesting bit about the report is China recording its RECORD HIGH surplus with the U.S. at $34.13B for the month. In fact, the nine-month surplus is now at $225.79B, about 15% higher than the same period last year.

The Donald hasn’t made comments about the release yet, but market geeks are on their toes (or at least on their Twitter feeds) to see if today’s report leads to an escalation of the U.S. China trade war.

However, Chinese trade figures on Friday showed China’s trade surplus with the United States hit a record high in September, providing a likely source of contention with U.S. President Donald Trump over trade policies and the currency.

Mixed market action

Market bears took a chill pill during the Asian session after making equities bleed for most of the week.

There were no fresh catalysts (aside from China’s release) to change market sentiment, so a bit of profit-taking ahead of the weekend might have factored in the cautious optimism.

  • Nikkei is down by 0.28% to 22,527.2
  • A SX 200 is up by 1.79% to 5,888.5
  • Shanghai index is down by 0.12% to 2,580.237
  • Hang Seng is up by 1.18% to 25,563.5

Commodity prices were also mixed, with gold taking some hits on some risk-taking while crude oil benchmarks recover from their steep losses from earlier this week.

  • Gold is down by 0.30% to $1,120.59 per troy ounce
  • Brent crude oil is up by 0.55% to $80.74 per barrel
  • U.S. WTI is up by 0.54% to $71.35 per barrel

Major Market Mover(s):

JPY

The low-yielding yen continued to take hits across the board, as a bit of risk-taking inspired demand for higher-yielding currencies.

USD/JPY is up by 21 pips (+0.18%) to 112.37; AUD/JPY is up by 18 pips (+23%) to 80.08; NZD/JPY is up by 15 pips (+0.20%) to 73.27; GBP/JPY is up by 32 pips (+0.22%) to 148.72, and CHF/JPY is up by 16 pips (+0.14%) to 113.51.

EUR

There were no direct catalysts to push the euro higher, but the common currency ended up extending its gains from the previous sessions.

EUR/USD is up by 11 pips (+0.10%) to 1.1604; EUR/GBP is up by 11 pips (+0.13%) to .8768; EUR/JPY is up by 37 pips (+0.28%) to 130.40; EUR/CHF is up by 18 pips (+0.15%) to 1.1487, and EUR/NZD is up by 45 pips (+0.25%) to 1.7796.

Watch Out For:

  • 6:00 am GMT: Germany’s final CPI expected to maintain 0.4% reading
  • 9:00 am GMT: Euro Zone industrial production (0.4% expected, -0.8% previous)