The Macro Brief: Chinese Economic Data Worsening - Has the USDCNY Reversed Trend?
With seemingly no economic recourse in sight, markets are looking as if the USDCNY has topped.
Despite my constant attempts to warn about China's secular decline, market participants pray to their diety of choice that Xi Jinping will flood the market with so much liquidty that Noah would blush.
Unfortunately, Xi does not care about your PnL.
A few hours ago, we got the most recent trade data out of China - and unholy hell it was horrible.
China's trade surplus increased to $491B, but this was on the back of declining YoY change in both imports and exports.
Imports declined 6.8% in June ( v -4.5% in May), and this was worse than the expectationa of a 4% decline.
Exports fell a whopping 12.4% (dollar value). This was worse than the expectations of a 9.5% decline and a 7.5% decline in May.
China is heavily reliant on exports. The situation is getting worse.
However, markets are preoccupied with the yuan's near-term strength. What's the culprit?
I'll dig further into that, where the yuan may go and what Chinese authorities will likely do next.
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