MAY TRADE BALANCE $13.1 BLN (FORECAST $18.6 BLN):
DANIEL HUI : on the headlines a strong set of trade numbers from China. Imports much stronger than expected. We still have yet to see the details, but this likely means that domestic demand remained quite solid – this will counteract some concerns of overtightening or hard landing scenarios. The potential strength in commodity imports (to be confirmed in the details) would also be positive commodity ccy’s like the AUD. With in-line exports and upside surprise in imports, the trade balance did not widen out significantly, as had been forecasted by the market. We think the trade surplus remains subdued without a significant rebound back to pre-crisis levels, and this will make some reassess how structurally undervalued the RMB really is.
HSBC Global Research