Chinese Trade Balance, Asia-Pacific Markets, NZD / USD – Talking Points
- Asia-Pacific markets weigh on Chinese data, regulatory concerns
- China’s March trade balance is the focus to assess the world trade situation
- Focus on NZD / USD as price attempts to overcome resistance from the Rising Wedge
Tuesday’s Asia-Pacific Outlook
Asia-Pacific markets could experience a neutral opening in Tuesday’s trading session after large losses on regional indices on Monday. Chinese stocks fell despite a rally in Alibaba (BABA) shares following a historic 18.2 billion yuan fine by Chinese regulators. The Chinese tech giant has rallied to hope that its regulatory issues are now in the rearview mirror.
However, investors have turned to other tech stocks, fearing they might come under the same regulatory scrutiny as Alibaba. These fears weighed on Chinese stocks, with the CSI 300 Index and the Hang Seng Index (HSI) falling 1.74% and 0.86% respectively. The Chinese yuan traded almost unchanged against the US dollar overnight.
Concern over an increasingly stringent regulatory environment, combined with concerns over a tightening of the Chinese government’s stimulus efforts, weighed on equities. Data on new yuan loans for March was disconnected on Monday, showing that banks across China continued to pump liquidity into the economy at a high rate. Chinese banks have facilitated 2.73 trillion yuan in new loans and 3.34 trillion in aggregate financing, according to the DailyFX Economic Calendar.
While China’s credit conditions have shown a sharp increase on a monthly basis, compared to last March, a period when China was pumping liquidity into the markets during the initial Covid pandemic, the numbers are more subdued. Growth in outstanding loans crossed the lines at 12.6% from a year ago, down from 12.9% in February. The PBOC is following a delicate line with the amount of credit in the economy, previously stating that it will not let the economy overheat due to the excess money in the system.
Today, more Chinese economic data will be released, this time in the form of trade data. China will release its March trade report at 03:00 GMT, with economists expecting an impression of $ 52.05 billion, up from $ 78.2 billion the previous month. Imports and exports are expected to pick up, but analysts expect a disproportionate recovery in imports relative to exports. A country’s trade balance is calculated as exports minus imports.
Outside of China, Australia will see home sales and business confidence data for March released. South Korea’s import and export prices for March are expected. Late Tuesday, New Zealand will release visitor arrivals data for February. A significant increase is not likely for February, but traders will soon enter New Zealand tourism and flight data for any rise in the economy thanks to travel now that a travel bubble between the island nation and Australia was set up. Earlier this morning, New Zealand retail electronic card spending reached 5.1% year-on-year for March.
NZD / USD technical outlook
The New Zealand dollar is attacking the upper bound of a falling wedge pattern after the kiwi surge earlier in the month, which saw the NZD / USD rise to the key resistance level. The currency pair is at the 38.2% Fibonacci retracement level which may offer support if the bulls continue to pressure the trendline. A drop lower would see the 200-day Simple Moving Average (SMA) start to focus. Overall, the higher path appears to be going with the MACD increasing after crossing its signal line.
NZD / USD Daily Chart
Graphic created with TradingView
NZD / USD NEGOTIATION RESOURCES
— Written by Thomas Westwater, Analyst for DailyFX.com
Contact Thomas, use the comments section below or @FxWestwateron Twitter