China Data Fuel Comm Dollar Pop

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Market Drivers February 14, 2019
US-China Trade talks may be extended
CNY Trade Balance beats
Nikkei 0.02% Dax 0.37%
Oil $54/bbl
Gold $1307/oz.

Europe and Asia:
CNY Trade Balance $39B vs. 33.5B
EUR GE GDP 0.9% vs. 0.7%

North America:
USD Retail Sales 8:30
USD PPI 8:30

A beat in Chinese trade balance numbers and speculation that US-China trade talks could be extended another 60 days helped boost risk in Asian and early European dealing today with commodity dollars picking up ground against the greenback as the day wore on.

Chinese trade data showed a surplus of $39B vs. 33B eyed with exports dropping -2.4% while imports plunged -41.2% but analysts cautioned that trade flows could be distorted by the lunar New Year which is why it has become custom to average out the January and February figures.
Nevertheless, the markets took as a good sign that despite the conflict between US and China the general sense of economic flow has not decreased markedly.

Risk assets also received a boost from speculation that US-China trade talks could be extended another 60 days – a seeming sign of progress. However, as the day progressed the speculation was denied by other sources, though there was no official response either way.

Regardless of the actual reality of the negotiations, the news was good enough to push both Aussie and kiwi higher with the former trading above the .7100 figure as bulls tried to push it through the .7150 level, while kiwi continued its two day steak of gains rebounding off the .6800 barrier to trade .6835 by morning London dealing.

In Europe today, not much on the calendar with only the German GDP data which proved better than expected at 0.9% vs. 0.7% eyed. EURUSD remained steady, but still below the 1.1300 figure, though the latest German data should ease any fears of imminent recession and keep the single currency supported above 1.1250.

In the US today the focus will turn to US Retail Sales with markets looking at 0.4% print versus 0.9% the month prior and given the turmoil of government shutdown last month the prospect of a miss is good. USDJPY has finally broken out of its 108.00-110.00 range and barring a truly horrid print it’s unlikely that it will fall back below that level today, but a pullback to 110.50 could be likely on any weak US consumer data, especially if it pushes yields even further down. For now the mild risk on tone continues to dominate trade and that should help commodity dollars extend their gains as the day progresses.

Boris Schlossberg
Managing Director

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