Euro trades broadly higher in Asian session today, except versus New Zealand Dollar. The common currency is extending this week’s powerful rebound. Meanwhile, Canadian Dollar is trading as the weakest one, followed but Dollar as the second weakest. For the week, Euro remains the strongest one on a powerful rebound. It’s followed by Australian Dollar as the second strongest. Canadian Dollar is the weakest one, paring back some of this month’s gain. Sterling is the second weakest on worries over no-deal Brexit.
The strength in Euro can firstly be explained by Dollar’s failure in breaking through key resistance level. That is, EUR/USD rebounded strongly after defending 1.1507 key support level. The greenback is apparently troubled by the recovery in the Chinese Yuan follow PBoC measure. EUR/GBP also takes advantage of the no-deal Brexit worries to surge through 0.8967 key resistance level. Resumption of medium term rise from 0.8620 in EUR/GBP could help lift Euro elsewhere.
Thirdly, the common currency appears to be benefited from China trade data. The set of data clearly showed that China is turning to the EU for trade, in rather drastic and speedy way in July. Since early part of the year, Dollar has always benefit from Trump’s escalation in trade conflicts. But going forward, it’s worth a watch on Euro’s reactions to Trump’s comments on trade with China.
China’s import from EU jumped 20.5% mom, trade surplus shrank -31.0% mom, as US-China trade war starts
China’s July trade data revealed some interesting findings as US-China trade war formally started. Import from the EU jumped as massive 20.% mom, 19.7% yoy. Trade surplus with EU dropped -31.0% mom, -7.9% yoy. On the other hand, trade surplus with US dropped a mere -3.0%, with -2.5% decline in export and -1.5% mom fall in imports. Looks like the EU could have the last laugh over Trump’s trade policy.
Here are the details:
- China trade surplus in CNY term narrowed to CNY 177B in July, down from CNY 262B, missed expectation of CNY 225B. Exports rose 6.0% yoy to CNY 1390B while imports jumped 20.9% yoy to CNY 1213B. Year-to-Jul, exports rose 5.0% yoy to CNY 8894B while imports rose 12.9% yoy to CNY 7826B, with CNY 1068B surplus.
- In USD term, trade surplus narrowed to USD 28.1B, down from USD 41.6B and missed expectation of USD 39.1B. Exports rose 12.2% yoy to USD 215.6B while imports rose 27.3% yoy to USD 187.5B. Year-to Jul, exports rose 12.6% yoy to USD 1387B