Daily Market Digest: China Trade Balance, BoJ Minutes

Today’s Economic events

• Japan current account 1.65 trillion vs. 1.60 trillion
• BoJ Bank lending 2.10% vs. 2.0%
• Australia ANZ job advertising m/m -0.80% vs. 0.40% previously
• China trade balance 343bn vs. 313bn
• China US denominated trade balance 52.3bn vs. 47.6bn
• Japan economy watchers sentiment 45.1 vs. 42.60
• German industrial production m/m 0.80% vs. 0.90%
• Switzerland CPI m/m -0.40% vs. -0.50%
• Sentix investor confidence 4.2 vs. 3.6
• Canada building permits m/m -5.50% vs. 2.70%

Coming Up

• US Labor market conditions index

China exports and imports decline at a faster pace in July

Exports and imports from China fell at a faster than expected pace in July, data from the customs department showed on Monday. On a year over year basis, exports fell 4.40% in US dollar terms, more than the expected 3.50% decline forecast by economists. Imports were also lower, falling 12.50% in July compared to a year ago and more than the forecast 7.0% declines.

China’s trade surplus amounted to $52.31 billion in July, rising more than the forecast of $47.3 billion.

On Friday, the PBoC said that it will continue with its prudent monetary policy into the second half of the year, putting to rest speculation of PBoC easing that was widely speculated. The central bank said that it will continue to provide adequate liquidity and ensure that credit expands at a reasonable pace. On the yuan’s exchange rate, the central bank reiterated that it will maintain a stable exchange rate while continuing with currency market reforms. At last check, China’s GDP was seen growing at 6.70% in the second quarter this year, spurred by the central bank’s stimulus measures and increased lending. China is aiming for a GDP growth rate of 6.5 – 7% this year.

Zhang Fan, an RHB economist said, “as the outlook of global economy is not very promising, China’s exports hardly can make a turnaround anytime soon.”  He however dismissed the notion of a PBoC easing, “China’s central bank is unlikely to take any aggressive easing in the third quarter as it said in its second-quarter monetary policy report that frequent RRR cuts will add downward pressure on the yuan. But he says the government may speed up spending for the rest of the year and increase fiscal deficit to 4% of its GDP in 2016, compared with a 3% target set earlier this year,” Zhang said.