China Trade Balance, Biden Fiscal Spending, AUD/USD, Gold – Talking Points
- China’s trade balance for December rises to $78.17b USD, beating expectations
- Markets discount trade data on increased fiscal spending prospects out of US
- Treasury yields rise on increased stimulus expectations, AUD/USD and gold drop
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China’s trade balance for December crossed the wires at US$78.17, according to the DailyFX Economic Calendar. Both imports and exports beat analysts’ expectations, rising 6.5% and 18.1% in dollar terms, respectively. The outsized increase in export growth fueled China’s trade surplus despite the increase in imports. China’s trade surplus with the United States rose $29.9 billion, bringing the 2020 total to $316.9 billion.
The Yuan was little changed on the release, but USD/CNH moved higher as the Greenback caught a bid on reports that the incoming Biden administration is aiming for a much larger stimulus relief package than previously thought. According to CNN, aides to President-elect Biden have discussed a figure near $2 trillion with some in Congress.
While China’s trade data bodes well from a global growth standpoint, markets are focusing on prospects for increased fiscal spending in the United States. The 10-year Treasury yield climbed nearly 3% as markets digested the news. Meanwhile, gold prices sank, with XAU/USD dropping below the 1835 handle. The risk-sensitive Australian Dollar – which typically reacts well to upbeat Chinese economic data due to the two countries’ close trading relationship – fell against the rising USD, despite the improved trade balance.
USD/CNH, US 10-Year Yield, AUD/USD, XAU/USD – 15 Min Chart
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— Written by Thomas Westwater, Analyst for DailyFX.com
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