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The Aussie started the day on a strong note thanks to Australia’s business survey reports, but soon fell back on weaker-than-expected Chinese trade numbers.

  • U.K. BRC retail sales (y/y) up by 0.9% vs. 1.2% previous
  • Japan’s bank lending (y/y) remains at 3.3% as expected
  • Japan’s current account (y/y) up from 1.40T to 1.52T vs. 1.51T expected
  • AU NAB business confidence surges from 8 to 12 in July
  • AU NAB business confidence inches 1 point higher to 15 in July
  • China’s trade surplus widens from 294B CNY to 321B CNY in July
  • China’s trade surplus (in $) dips from 42.8B to 46.7B
  • Japan’s Economy Watchers Sentiment slips from 50.0 to 49.7 in July

Major Events/Reports:

Australia’s business conditions and confidence

Earlier today National Australia Bank (NAB) showed Australia’s business conditions and confidence maintaining their strong run in July.

Business conditions edged one point higher to +15, which marks the highest reading since early 2008. A closer look reveals that the employment conditions still have enough juice to push unemployment lower – something that the RBA would be happy to hear.

Business confidence also rose higher, this time by four points to +12 which is twice the report’s long-run average. However, capex indicators have deteriorated while other leading indicators were “a little less upbeat.”

Overall, NAB still thinks the strong employment component and business conditions give some reason for optimism especially if they sustain their trends.

China’s disappointing trade figures

Data from the world’s second largest economy saw trade figures that are weaker than what markets had expected.

China’s exports only grew by 7.2% from a year earlier in July, which is weaker than June’s 11.3% increase and the expected 10.9% uptick. Heck, it marks the weakest growth since February!

Market players believe that softening global demand might have something to do with the disappointing figures while others point to cooling producer price inflation.

Meanwhile, imports rose by 11.0% compared to June’s 17.2% uptick and the expected 16.6% increase. It also marks the weakest since December 2016. Some analysts point to declining domestic demand as a reason for the weak reading, while others mention the government’s policy tightening.

In yuan terms, China’s exports are up by 11.2% while imports are up by 14.7% from a year ago.

The numbers leave China with a trade surplus of $46.74 in July, the highest since January. Keep in mind, however, that the figures are preliminary as the final ones will be released on August 23.

Major Market Mover(s):

AUD

The Aussie started the trading session on a strong note after Australia’s business conditions and confidence printed higher figures.

However, the comdoll took hits after China’s export and import numbers disappointed market players.

AUD/USD shot up to .7939 before settling down to .7914, AUD/JPY jumped to 87.84 before dipping to 87.57, and AUD/NZD rose to 1.0780 before closing at 1.0764.

Watch Out For:

  • 6:45 am GMT: Switzerland’s unemployment rate expected to remain at 3.2%
  • 7:00 am GMT: Germany’s trade balance (20.8B EUR expected, 20.3B EUR previous)
  • 7:45 am GMT: France’s government budget balance
  • 7:45 am GMT: France’s trade balance (-5.1B EUR expected, -4.9B EUR previous)