Commodity Currencies Gain On Upbeat China Trade Data

(RTTNews) - The Commodity-linked currencies such as Australia, the New Zealand and the Canadian dollars strengthened against their major currencies in the Asian session on Thursday, after data showed that China's exports expanded the most in more than two years in October, while imports declined at a sharper-than-expected pace due to weaker domestic demand.

The official data showed that the China's exports grew 12.7 percent on a yearly basis, following an increase of 2.4 percent in September, customs data revealed. Shipments were forecast to climb only 5.0 percent.

On the other hand, imports dropped 2.3 percent annually after a 0.3 percent rise in the previous month. Economists had forecast imports to drop 1.5 percent.

As a result, the trade surplus surged to $95.7 billion from $81.7 billion in the previous month and remained well above economists' forecast of $73.5 billion.

In recent years, exports acted as the major growth driver, while weak domestic activity and the property market downturn damped consumption.

Donald Trump's second term as the U.S. President is likely to pose headwinds to Chinese trade. In his pre-election campaign, Trump vowed to impose tariffs of between 60 and 100 percent on Chinese imports.

It is believed a Trump administration will scale back government regulations and be less hostile to mergers and acquisitions but policies such as tax cuts and tariffs could trigger price pressures.

Trader's focus shifted to interest-rate decisions from the Bank of England and the Federal Reserve due later in the day.

In economic news, data from the Australian Bureau of Statistics showed that the total number of building approvals issued in September was up a seasonally adjusted 4.4 percent on month, coming in at 14,842. That was in line with expectations following the 3.9 percent drop in August.

On a yearly basis, overall approvals climbed 6.8 percent.

In the Asian trading today, the Australian dollar rose to nearly a 3-1/2-month high of 102.27 against the yen and a 2-week high of 1.6214 against the euro, from yesterday's closing quotes of 101.56 and 1.6234, respectively. If the aussie extends its uptrend, it is likely to find resistance around 101.56 against the yen and 1.60 against the euro.

Against the Canadian and the New Zealand dollars, the aussie advanced to a 3-day high of 0.9212 and a 2-day high of 1.1076 from Wednesday's closing quotes of 0.9154 and 1.1057, respectively. The aussie may test resistance around 0.93 against the loonie and 1.12 against the kiwi.

The aussie edged up to 0.6637 against the U.S. dollar, from yesterday's closing value of 0.6568. The next possible upside target for the aussie is seen around the 0.68 region.

The NZ dollar rose to a 3-1/2-month high of 92.43 against the yen and a 2-week high of 1.7934 against the euro, from yesterday's closing quotes of 91.82 and 1.8061, respectively. The kiwi may test resistance around 96.00 against the yen and 1.77 against the euro.

Against the U.S. dollar, the kiwi edged up to 0.6004 from Wednesday's closing value of 0.5938. If the kiwi extends its uptrend, it is likely to find resistance around the 0.61 region.

The Canadian dollar rose to more than a 3-month high of 111.19 against the yen, from yesterday's closing value of 110.93. If the loonie extends its uptrend, it is likely to find resistance around the 112.00 area.

Against the U.S. dollar and the euro, the loonie advanced to 1.3871 and 1.4916 from Wednesday's closing quotes of 1.3938 and 1.4953, respectively. On the upside, 1.36 against the greenback and 1.48 against the euro are seen as the next resistance levels for the loonie.

Looking ahead, Eurostat releases euro area retail sales figures for September at 5:00 am ET. Economists expect sales to grow 0.4 percent on month after a 0.2 percent rise in August.

At 7:00 am ET, the Bank of England will announce its interest rate decision for November. At the end of two-day policy meeting, the Monetary Policy Committee of the BoE is expected to lower the bank rate to 4.75 percent from 5.00 percent.

In the New York session, U.S. weekly jobless claims data and wholesale inventories for September are set to be released.

At 2:00 pm ET, The U.S. Federal Open Market Committee (FOMC) announces its interest rate decision, but uncertainty over the future policy easing escalated after Donald Trump won the U.S. presidential election. The bank is expected to lower its benchmark interest rate by 25 basis points to 4.75 percent at its November meeting.

At 2:30 pm ET, the U.S. Fed chair Jerome Powell is scheduled to speak at a press conference following the announcement of U.S. Fed monetary policy.