Surprisingly weak Chinese and German trade numbers for July and June respectively put a question mark over an otherwise fairly rosy global economic picture around mid-year.
On
their own, the reports are unlikely to change the fairly buoyant
settings in world markets, but they may inject a note of caution and
will be another data point for policymakers to consider.
The sub-forecast Chinese export and import growth
was softened locally as the country’s trade surplus beat expectations
and the yuan hit a 10-month high, helped further by news on Monday that
the country’s foreign exchange reserves rose twice as much as expected
last month. What’s more, the rising bilateral trade surplus with the
United States will jar as trade tensions between the two giant economies
rise – putting further upward pressure on the yuan.
If nothing else, the data may liven up fairly sleepy August markets. The Dow Jones and the MSCI World eked out new highs in very thin ranges on Monday as the upbeat Q2 earnings season starts to wind down.
Sterling
was the only big currency mover during the day, slipng to 10-month
lows against the euro and its lowest since March on a trade-weighted
basis.
Wrangling in Brexit negotiations over the final ‘divorce bill’ grabbed the headlines, but the pound has been under pressure since the Bank of England signalled last week that no interest rate rise this year was likely and amid a series of data reports this week that domestic consumption is weakening.
South Africa’s rand rallied more than 1 percent on Monday as markets await a parliamentary vote of no-confidence
in President Jacob Zuma. News that Tuesday’s vote would be conducted
via secret ballot lifted the currency as it was seen as upping the
chances Zuma would be removed after months of political tension and
uncertainty over the country’s economic policies.
Asia bourses were mixed to lower overnight after the Chinese trade numbers. European markets are expected to tick lower too. Brent crude was firm above $52.
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