USD/CNY under pressure as China exports jump for third month in a row
- The USD/CNY pair was under pressure as traders reacted to the trade numbers from China.
- The country's exports rose by 9.5% in August while imports declined by more than 1%.
- This led to a trade surplus of more than $58 billion vs US trade deficit of more than $63 billion.
The USD/CNY pair dropped by almost 0.20% as traders reacted to strong trade numbers from China. It is trading at 6.8300, which is a few pips above its lowest level since May 2019.
China exports rose in August
China has been the best-performing major economies in recent months. In the second quarter, the economy expanded by 3.2% while that of the United States and the UK fell by 32.5% and 20.5%, respectively.
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The economy continued to do well in the second quarter judging by the trade numbers released by the statistics office. The data showed that exports expanded by 9.5% in dollar terms. That increase was better than the previous month’s increase of 7.2% and the 7.1% that analysts were expecting. It was also the third straight month that exports have increased.
The United States remained one of the biggest buyers of Chinese goods. Exports to the country increased by 20% to $44.4 billion while imports increased by just 1.5% leaving a trade surplus of more than $34 billion.
But Chinese imports fell for the second month in a row. Total imports declined by 2.1%, which was a steeper decline than the previous month’s decrease of 1.4%. Analysts were expecting the imports to rise by 0.1%.
As a result, the country’s trade surplus was $58.93 billion in August, which was a step back from the previous month’s $62 billion.
These numbers are a sharp contrast of the trade numbers released by the United States last week. The data showed that exports from the country increased by 8.1% to $166 billion while imports rose by 11% to $237 billion. As a result, the trade deficit widened to more than $63 billion.
Analysts cite the growing exports from China to several things. First, demand for vital medical products like masks and ventilators has increased globally. Second, demand has risen as more countries reopen their economies. As such, businesses that were closed in March and April have started ordering from the country. Also, bilateral relations between the country and the US have not had a major impact on trade.
USD/CNY technical outlook
The USD/CNY pair is trading at 6.8300, which is a few points above last week’s low of 6.8100. On the daily chart, this price is below the 61.8% Fibonacci retracement level. It is also below the 50-day and 100-day exponential moving averages. The Relative Strength Index (RSI) has also been falling. Therefore, the pair is likely to continue falling as bears attempt to move to the 78.6% Fibonacci retracement level at 6.7795.