Chinese exports fell less than expected in August

China's exports fell 8.8 per cent in August year-on-year, while imports contracted 7.3 per cent, customs data showed on Thursday.

By Ahmed Azzam | @3zzamous | 7 September 2023

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  • China's export decline moderates in August, offering hope for economic recovery.

  • Japan's BOJ emphasizes continued monetary easing amid inflation challenges.

  • China's crude oil imports surge by 21% in August, reflecting robust energy demand.

  • Gold prices stumble below $1,920/ounce as the US dollar rallies on strong services sector data.

  • Upcoming US unemployment claims and Federal Reserve insights draw market attention.

China's export slump eases amidst lingering uncertainty

China, the world's economic powerhouse, showed promising signs of resilience in August as the global economic landscape continued to evolve. Amidst a backdrop of uncertainty and shifting trade dynamics, China's export slump eased, igniting hopes of recovery in certain sectors. Overseas shipments, measured in dollar terms, experienced a modest decline of 8.8% from the previous year, while imports contracted by 7.3%, both figures surpassing initial estimates. This translated to a trade surplus of an impressive $68 billion, reflecting a potentially brighter horizon for the Chinese economy.

Japan's Monetary Tug of War Continues

Turning to Japan, the Bank of Japan's (BOJ) ongoing monetary policy dance remains a topic of intrigue. BOJ board member Junko Nakagawa recently emphasized the appropriateness of continuing monetary easing measures, as Japan grapples with persistent inflationary challenges. Nakagawa highlighted that the bank is yet to reach its elusive inflation target, warranting the continuation of easing policies. However, the ever-present cloud of uncertainty casts a shadow over the proceedings, with Nakagawa acknowledging the possibility of unforeseen upward pressures on prices.

Oil imports surge as US Crude stockpiles plummet

The energy market, always a focal point of global economic dynamics, saw China's crude imports surge by an impressive 21% in August, reaching 52.8 million tons, compared to the previous month. This surge in demand showcases China's unwavering appetite for energy resources as it navigates its economic course.

Meanwhile, on the other side of the Pacific, the United States witnessed a significant decline in crude oil stockpiles, falling by a staggering 5.5 million barrels during the last week. This marks the seventh drop in stockpiles over the past eight weeks, potentially pushing total holdings to their lowest levels in nine months, pending confirmation by the Energy Information Administration (EIA). Cushing, a key oil storage hub, also saw a reduction in its inventories, further underscoring tightening supplies in the US.

Gold stumbles amidst Dollar rally

The precious metal, gold, found itself under pressure, trading below the $1,920 per ounce mark. A recent decline in gold prices can be attributed to the resurgent strength of the US dollar, fueled by stronger-than-expected data from the US services sector. The ISM Services PMI for the US unexpectedly surged to 54.5 in August, signaling the most robust growth in the services sector in half a year. This robust performance comfortably surpassed earlier forecasts of 52.5, further heightening concerns over inflation and the likelihood of rate hikes in the near future.

Upcoming data and Federal Reserve insights

As investors remain on the edge of their seats, today promises a wealth of crucial economic data. Eyes are locked onto US unemployment claims, which may reveal a slight increase, potentially rising to 232,000 from 228,000. Simultaneously, the market will tune in to insights from Federal Reserve members including Harker, Goolsbee, Williams, Bowman, and Logan. These remarks are eagerly anticipated, providing essential clues about the next moves to be made during the upcoming Federal Reserve meeting.