11 Jul 2013
Flash: China markets in focus - BBH
FXstreet.com (London) -BBH Global Currency Strategy Team said China trade data for June was much weaker than expected.
They explained that exports fell 3.1% in May on a y/y basis. "It is the first outright decline in over a year and the largest drop since October 2009. The consensus expected a 3.7% increase. Imports slipped 0.7% while the consensus expected a 6.0% rise. The net result was a $27.1 bln surplus after a $20.4 bln surplus in May." They noted that the news spurred some speculation that the PBOC may consider a cut in the required reserves, which is a type of monetary easing. They mentioned that China Q2 GDP is due out July 15, and they think there are downside risks to the consensus 7.6% y/y vs. 7.7% y/y in Q1. "CNY has traded largely sideways since mid-May, and we believe that will continue in Q3. It’s worth noting the 5th US-China Strategic and Economic Dialogue takes place July 10/11 in Washington DC. It is the first to have Secretary of State Kerry and Secretary of Treasury Lew attending in their new posts."
They explained that exports fell 3.1% in May on a y/y basis. "It is the first outright decline in over a year and the largest drop since October 2009. The consensus expected a 3.7% increase. Imports slipped 0.7% while the consensus expected a 6.0% rise. The net result was a $27.1 bln surplus after a $20.4 bln surplus in May." They noted that the news spurred some speculation that the PBOC may consider a cut in the required reserves, which is a type of monetary easing. They mentioned that China Q2 GDP is due out July 15, and they think there are downside risks to the consensus 7.6% y/y vs. 7.7% y/y in Q1. "CNY has traded largely sideways since mid-May, and we believe that will continue in Q3. It’s worth noting the 5th US-China Strategic and Economic Dialogue takes place July 10/11 in Washington DC. It is the first to have Secretary of State Kerry and Secretary of Treasury Lew attending in their new posts."