AUD/USD keeps losses despite big beat on China's exports
- AUD/USD remains in the red, despite a big beat on China's exports.
- China's imports unexpectedly dropped in May, signaling a weakening of domestic demand conditions.
AUD/USD is struggling to gain ground despite the above-forecast China exports data. The currency pair is currently trading at 0.6982, having hit a session low of 0.6979 soon before press time.
China's exports rose 7.7% year-on-year in CNY terms in May, beating the expected rise of 4.7% by a big margin. Meanwhile, imports, a barometer of domestic demand, fell 2.5%, missing the expected increase of 5.8% and down significantly from the 10.3% rise registered in April. As a result, the trade surplus ticked higher to CNY 279.100 billion from 93.57 billion.
In US Dollar terms, exports rose at 1.1% year-on-year, while imports dipped 8.5%, yielding a trade surplus $41.65 billion.
An uptick in China's exports indicates the global demand conditions are holding up well despite the escalating trade tensions. However, the domestic demand in China is weakening, meaning consumer spending may not be able to compensate for the decline in international trade and the nation faces the risk of a deeper economic slowdown.
As a result, the riskier assets may come under pressure during the day ahead, pushing the AUD to fresh session lows below 0.6979. Gold prices have retreated sharply to $1,330 from 14-month highs above $1,345 hit on Friday. The American Dollar, therefore, may remain bid across the board.
Pivot levels