What To Expect From China’s Trade Balance

Sourced from: https://www.countingpips.com/2019/07/what-to-expect-from-chinas-trade-balance/

The Components

Expectations are for Chinese exports to get dropped -7.7% since the previous calendar year.

This would imply that the expectations of an increase in the trade surplus would not be fulfilled.
With the drama of the continuing US-China trade problem getting all the headlines, let us drill down to the underlying statistics to get a better feeling of the way the market can respond to the upcoming information release. The figure is additional important this time around as it is the last important data before the release of China’s Q2 GDP next Monday.

By Orbex

What We’re Expecting

China’s trade balance has a history of demonstrating extreme volatility across the close of the year. This is due to the effect of vacations in China and in their major export markets. The balance then flattens for the remainder of the year. If this level should happen to solidify about the 40B mark, it might be the initial increase in annualized trade equilibrium since 2014.
The Chinese government has lately been discussing the matter of professional services exports.
Exports rose by a modest 1.1%, while imports fell precipitously by -8.5%. This drop was mostly seen in metal products with a significant drop in copper and iron ore. (At precisely exactly the identical time, iron ore and copper prices were reaching the peak of the cycle up to now.)

Of course, the entire point of trade is to make money. Along with the issues about the cash flow would be those which drive the currency markets.

Last monthwe had a surprise with the transaction balance doubling expectations. This has been driven mostly by the disconnect between both imports and exports.
If exports slip again, this could place more pressure on the yuan. Consequently, this would create the carry trade less intriguing, opening the possibility of a vicious cycle.

China’s trade balance tends to rock markets anywhere! So even in case you don’t follow the Yuan, this is still an important piece of data to keep tabs on.
With the continuation of the trade war, along with the Fed less likely to lower rates as aggressively after the June NFP, there’s growing pressure for Chinese holders to curtail their resources and need dollars.

Cash Flows

To make things worse, the decline of almost 11% since March in the Yuan has left this trade unappetizing if not outright unprofitable.
The increase in exports might be somewhat one-off, though.  The reason behind the beat of expectations is that companies were hurrying to receive their earnings through customs before Trump’s tariff hikes would take effect. Now the two nations are once again at a truce, the export number might slide. This is because imports which would otherwise have left during June were accounted for in May.
The Fed was engaged in a cycle. Meanwhile, its Chinese counterpart has been reluctant to follow suit because of weakness in the national market. That differential has been closing.
The consensus among analysts is that the June equilibrium of trade will come in at a surplus of $44.7B, up from the prior month’s $41.7B. This might bring it back in line with the average it has been maintaining for the past few years prior to the transaction war began.

RICE Analysis: Bad weather can reduce rice harvest

Sourced from: https://www.countingpips.com/2019/07/rice-analysis-bad-weather-can-reduce-rice-harvest/

Worsening weather conditions in China and drought in India can reduce returns. Can the rice quotation growth continue?
Technical evaluation indicators have generated a uptrend signs. Further growth of quotations is possible in case of a further reduction in world yield.

  • The Bolinger bands have narrowed, indicating a volatility decrease. The bottom line of Bollinger includes up a pitch. It has formed a divergence.
  • The MACD index shows a sign to increase.
  • The bullish momentum could grow if if Rice surpasses its last greatest: 11.65. This level can be applied as an entrance point. The initial stop loss may be placed under the Parabolic signal, the last 2 lower fractal and the base Bollinger line: 11.15. After putting the pending sequence, the stop loss will soon be moved after the signals of Bollinger and Parabolic to the next fractal minimal. Thus, we’re altering the potential profit/loss to this breakeven point. More risk-averse traders may change to the 4-hour graph after the trade and set a stop loss shifting it in the path of their trade. If the cost meets the halt amount (11,15) without reaching the arrangement (11,65), we urge to cancel the arrangement : the market sustains internal changes that weren’t taken into account.

    On the daily phase Rice: D1 is in the uptrend. The line of this neutral trend has come to be a support level that was not broken down throughout the purchase cost correction.
    Bad weather can Decrease rice harvest
    This is practically a quarter less than the amount for the date of a year. Back in Indiathe rainy season began because of the monsoons. Already the week in a row there’s a scarcity of rain. Their amount for the week ended July 3 was 6% lower than the average for the previous 50 decades. Lack of moisture can be a element in reducing the return of rice and other plants in India. Precipitation is normal for midsummer, although in China, there is increased heat. Notice that the global rice exporters are situated in 1 region – in Asia: Thailand India, Vietnam and Pakistan. China is the world biggest importer of rice.
    Market Evaluation Given by IFCMarkets

    Trade War Risks Prompt More Chinese Stimulus

    Sourced from: https://www.countingpips.com/2019/06/trade-war-risks-prompt-more-chinese-stimulus/

    USDCNH Holds Business Below $7, Bid Above Ascending Trendline

    CPI inflation isn’t a significant concern for the Chinese in the moment as it’s a bit greater compared to other countries. That being said, PPI inflation — a gauge of industrial profitability — will likely probably be watched more carefully as it rose a mere 0.6percent year on year (YoY).

    Additionally, the move came later PBOC has been prompted to inject more money into the banking community. And, naturally, it was a move to calm investors amid fears of further takeovers.
    Up until now, it has been uncertain whether the failure to reach a trade deal between the US and China has been attributed to China’s lack of expertise when it comes to commerce matters.

    In the short term, the couple looks bullish with invalidation at 6.9173 service and below the ascending trendline. If the downslide begins, costs could break below wave 4 at 6.8978 for a deeper correction.
    This last set of data saw inflation climbing to a 15-month large  but the appreciation had been owed mainly to pork prices. In reality, carrying energy and food from this equation, core CPI inflation increased only 1.6 percent.

    Sources close to officials also have said that the US has always had an advantage on trade issues, at least between the US and Chinese delegates, also that the Chinese have limited experience in managing trade disputes.
    But there has not been an official reason behind the failure of the offer.

    From Orbex

    In a new announcement about the White House lawn, however, and regardless of Chinese officials’ lack of expertise in law, Trump said that it, was not, in reality, that the Chinese who are holding back the bargain . The president confirmed:
    The 50% RSI just rejected bulls, but this might not survive long.
    An escalation from the trade dispute and fears of renewed tariffs has forced the local authorities to take stimulus measures once more.  This has left room for infrastructure by extending additional credit. This time, some type of unique bonds are going to be applied as funding for infrastructure.

    Trump Takes Positive Side Away

    Regardless of credit enhancing, flows have remained at low levels. Really, at better numbers than last season, but still far below average. This seems to be painful for Chinese officials as they are worried about the way in which the nation’s GDP is going to pan out.

    Chinese CPI Organizing 15-Month High, But Core Low

    Trump’s comments took off some of the positive US-Mexico vibes in the economies.  He cautioned a deal needs to occur, but only provided that China respects the US’ earlier needs.

    After the wave 4 correction finished at 6.8978, also following an upside bias indicated by the ascending trendline (gray color), the probabilities this ends up as a impulse wave 5 have grown.
    “China is a major competition, and now China would like to make a bargain quite poorly. It’s me right now that is holding up the offer. And we are likely to do a Wonderful deal with China or we are not planning to do a whole lot”

    The Chinese government went into easing mode back in July this past year. In actuality, it has done every single month of the second half of 2018 so as to offer stimulation.

    This was a fairly good session for Chinese equities because of the stimulation measures with momentum relieving off after an increase in Oriental CPI inflation.

    US Increases Trade Tariffs Against China – Markets, Gold, and Silver

    Sourced from: https://www.countingpips.com/2019/05/us-increases-trade-tariffs-against-china-markets-gold-and-silver/

    As the US/China commerce bargain breaks down the US increased tariffs on 200B of Chinese products.  China has pledged to retaliate to the transfer.  The past week has witnessed the markets shocked by two items: Iran sanctions and also US/China trade breakdown.  The markets had been anticipating a US/China commerce deal to be attained and optimism proved to be high — thus the rally in the stock market and the rally in america stock exchange.  What ?

    (May be worth tens of thousands of dollars)

    And that’s excactly what is happening right on queue. Actually, we shut out our SDS position on Thursday to get a fast 3.9% gain and our other new trade started Thursday is up 18% already.

    Gold is showing indications of a possible price leg at the first stages as we’d been indicating.  Our April 21~24 momentum foundation call ago appears to be precise.  We are just awaiting the price swing to begin.  When it starts, the momentum behind the upside movement will increase since it will capture the attention of several gold dealers and solidify the”panic” aspect of the move.

    Well, we believe news that will likely hit the markets over the subsequent 3 + months, as well as this news, will still continue to prompt the Shake-Out we’ve been warning about.  Depending on how severe these information events are, that the spinning in the markets might be rather severe.
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    Our recent study suggests the US stock market may try to form a bottom near these lows and that lows in the US stock market may be support.  Our research indicates the Transportation Index is contributing this movement.  We consider both the RED, as well as the ORANGE Moving Average degree and GREY Fibonacci projection points, will act as a price floor this week and next.  The YM could move lower by 100 to 200 points now, before regaining close to the close of the day, retesting those levels.

    Silver is still lagging behind Gold normal.  We continue to trust the actual opportunity for there is located a trade in Silver.  The potential for a $22 o ~$28 upside cost swing on a industry breakdown or fear play is quite solid.  Headed into the 2020 US election cycle and with the uncertainty in the worldwide markets, we believe that this is actually the”sleeper trade” of their next 16+ months.  Silver must accompany when Gold starts to breakout to the upside.

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    These US trade tariffs puts pressure on China to come to the table and develop and fair deal.  This really isn’t the old method of slow negotiations with no actual consequences.  For China, the lack of access to the US market may be catastrophic in both the short and long term.  Skilled traders should not be optimistic throughout this weekend.  Guard your longs and prepare for news during the next few weeks.  Here is the kind of market that can make or break most dealers.
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    South Korea’s FX reserves slip in Sept. and swap deal with China expires

    South Korea's foreign exchange reserves havedipped for the first time in seven months.

    The country had enjoyed a steady rise in reservesfrom February to August, but the slight drop in September, combined with the central bank'sfailure to renew a currency swap deal with China, is worrying experts.

    Lee Unshin reports.

    According to the Bank of Korea, as of September,the nation's foreign exchange reserves stood at 384.

    67 billion U.



    down 170million from the previous month.

    It is the first dip in Korea's foreign exchangereserves in seven months.

    As of the end of August, the country was theworld's ninth largest foreign exchange holder.

    Central bank data shows that the greenbackstrengthening in the global market lowered the value of non-dollar currencies, includingthe Korean Won, Euro and Japanese Yen.

    Meanwhile China's reserves remained the highestin the world, rising for the 8th month straight to over 3.

    1 trillion dollars last month.

    Seoul and Beijing's 56 billion dollar currencyswap deal came to an end earlier this week.

    as the two nations failed to reach an agreementon terms to extend the deal.

    The agreement had accounted for some 46-percentof the total value of Korea's foreign currency swap deals.

    While BOK officials added that negotiationsto renew the deal are still underway,.

    market analysts in Korea voice concerns that if thedeal is over for good, it could result in financial damage for both sides in the longrun.

    They also stressed the need to keep Korea'sforeign exchange reserves high in case a new deal isn't agreed.

    Lee Unshin Arirang News.

    Source: Youtube

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