Chinese exports growth likely contracted in January, headline inflation to have decelerated further

Chinese exports data for the month of January is set to release tomorrow. According to a DBS Bank research report, China’s exports are likely to have contracted 2.7 percent year-on-year in January after rising 4.4 percent in December. This is possibly due to the different timing of the Lunar New Year.

Outward shipment performance is clouded by softening global demand and potential tariffs from the U.S. Import growth is also expected to fall further in the midst of a deceleration in domestic activities and fall in oil prices by 11 percent year-on-year.

Early indicators show further easing in trade sentiments. New export orders PMI and imports PMI have shrunk for 8 and 7 straight months, respectively. Trade balance is expected to deteriorate in coming months, added DBS Bank.

Meanwhile, the headline inflation is expected to have decelerated further in January to 1.7 percent from 1.9 percent in December, alongside softening domestic demand. The effect on food prices as a result of the wide spread of pork disease has been contained. The fall in oil price also added downward pressure on import prices, said DBS Bank.

At 17:00 GMT the FxWirePro's Hourly Strength Index of Chinese Yuan was neutral at 20.445, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at 20.6876 more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex