Summary:

• strong data from China supports optimism
• Chinese shares lead the rally in Asia
• AUD is the strongest G10 currency in Asia

Moods have been great during the Asian session as the Chinese Hang Seng CE (CHNComp on xStation platform) surged by nearly 1.6% and other Asian indices rallied as well. Decent data from the Chinese economy assured investors and helped AUD climb the most among the G10 group. US dollar remains under pressure being the weakest currency currently.

Strong trade data from China is a promising sign for the global economy. Source: Macrobond, XTB Research 

China released trade data for June and the report proved to be better than expected on all fronts. Surplus, which is crucial for the GDP release, was only marginally higher than anticipated at $42.8 billion vs the consensus of 42.6 but it was higher than in May ($40.79 billion). However, that solid surplus was achieved at higher volumes – a sign of increased business activity. Exports increased by 11.3% y/y in US dollar terms (consensus 8.9%, previously 8.7%) while imports surged by 17.2% y/y (consensus 14.5%, previously 14.8%). A significant increase in imports volume is important because it means that demand in China is buoyant and the economy keeps avoiding a slowdown. It’s also a bright sign for China’s trading partners.

Chinese equities (CHNComp) trade at the highest level since March. This market remains in an upward trend. Source: xStation5 

Unsurprisingly, the Chinese stock market surged higher with CHNComp up by 1.58% and shares in Shanghai up by a more modest 0.54%. While the Japanese Nikkei (JAP225 on xStation) inched up by just 0.05%, limited by relative strength of the yen, Australian ASX (AUS200) leaped by nearly 1.2%.

AUDUSD is surging within a broad consolidation. The key resistance zone spans between 0.7740 and 0.7780. Source: xStation5

These solid moods were present on the FX markets as well. The Australian dollar is now the strongest G10 currency , followed closely by NZD, EUR and SEK.