U.S. Stock Futures Slip After CPI-Fueled Rally as Markets Weigh Economic Uncertainty 
New Zealand Business Confidence Hits 30-Year High as Economic Outlook Improves 
Oil Prices Steady in Asia but Headed for Weekly Loss on Supply Glut Concerns 
BoE Set to Cut Rates as UK Inflation Slows, but Further Easing Likely Limited 
China Keeps Benchmark Lending Rates Steady as Economic Outlook Remains Cautious 
Canada Signals Delay in US Tariff Deal as Talks Shift to USMCA Review 
Silver Prices Hit Record High as Geopolitical Tensions Fuel Safe-Haven Demand 
U.S. Stocks End Week Higher as Tech Rally Offsets Consumer Weakness 
EU Approves €90 Billion Ukraine Aid as Frozen Russian Asset Plan Stalls 
Trump Defends Economic Record in North Carolina as Midterm Election Pressure Mounts 
Global Demand for Yuan Loans and Bonds Surges as China Pushes Currency Internationalization 
Oil Prices Climb on Venezuela Blockade, Russia Sanctions Fears, and Supply Risks 
U.S. Stock Futures Edge Higher as Micron Earnings Boost AI Sentiment Ahead of CPI Data 
Dollar Holds Firm Ahead of Global Central Bank Decisions as Yen, Sterling and Euro React 
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Asian Markets Rebound as Tech Rally Lifts Wall Street, Investors Brace for BOJ Rate Hike 
Most notably, China has been the major trade partner of Aussies and Kiwis in the recent past which is why we would like to shed some light on Aussie trade exposure with China ahead of RBA’s monetary policy.
Australia is in the global top 20 of countries ranked by their export exposure to China. In terms of the growth in exports, China’s role was even more critical: increases in sales to China alone accounted for almost 80 per cent of all Australian export growth in value terms in 2013-14.
China accounted for roughly AU$155 billion ($117 billion, based on June 2017 exchange rates) in import-export trade with Australia in 2016, including AU$93 ($70.3) billion in Australian exports.
China has been Australia’s most important export market since 2009 and in recent years has been central to our overall export performance. For an instance, it sold China goods and services worth A$107.5 billion in 2013-14, which accounted for almost one in every three export dollars earned over the year.
The China-Australia Free Trade Agreement (ChAFTA), which took effect in December 2015, is a significant addition to the global landscape for international trade. Besides directly affecting companies engaged in import-export trade between Australia and China, ChAFTA also has potential implications for U.S. companies, since China is the largest goods trading partner for the U.S.
These Chinese data have been volatile in recent months, but AUDUSD looks broadly fair given the twists and turns in Chinese financial conditions of late.
AUD has traced China’s on-again off-again policy shifts on financial conditions and liquidity reasonably well over the past 9 years (refer above chart).
These mini-turns in financial conditions have not been easy to predict ahead of time, the cycle length is shortening, and the transmission to commodities looks more speculative than fundamental.
These cycles have been influential for AUD, and suggest that any further developments by Chinese authorities on this front will bear watching in coming months.
We advocate staying shorts in AUDUSD futures contracts of far-month tenors with a view to arrest downside risks. Courtesy: JPM
