Currency Analyst since 2010

Risk sentiment depends on China and Fed

The market’s risk sentiment was negative on Tuesday due to the mixed Chinese trade data: the nation’s exports came above forecast falling by 3.7% vs. an expected slide of 6.3%, but imports lost more than 20%. As a result, concerns about the state of China’s economy remained. At the same time, there are hopes that China’s authorities will ease monetary policy supporting the national economy and markets.  

On Monday the People’s Bank of China expanded a scheme that increases banks' ability to lend, and investors believe that more action will come from the central bank.

Another thing, which is supporting the market’s sentiment, is the declining expectations that the Federal Reserve will raise interest rates this year. US dollar is trading under pressure versus the euro, Japanese yen and Swiss franc. AUD/USD found resistance in the 0.7365 area (100-day MA) and slipped to 0.7290. Shanghai Composite is flat after gaining more than 3% on Monday.

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