The rise in copper and iron ore is directly related to low supply and greater demand and following the Chinese trade data, it could be said that demand for materials is on track for much greater things.
Chinese exports year on year are up 32.3% and for the month of April they were up 22.2% beating expectations of 24.1% and 12.5% respectively. This shows that the supply chains are starting to be less disrupted and that the global economy needs more things. We also know that there is still a 3-month lead time for some goods, so prices paid are most probably going to stay higher for a couple of months more. Internally China is also in need of more things as the import data shows growing more than the previous year or months data, though not quite as much as analysts had expected.
The overall trade balance is getting greater moving up to $42.85 billion from the previous month's reading of $13.8 billion. Which smashed the expected number of $28.1 billion.
The Chinese Reminibi versus the US dollar is again showing signs of appreciation as the price action closes and accepts below the daily Ichimoku cloud indicator.
This signals further losses in the US dollar index, so we could see the major US dollar crosses, commodities, and their forex pairs rising into next week.
On the subject of Trade Balance, this morning’s European open shows that Germany has also increased their balance of trade to €20.5 billion beating expectations and at figures more akin to pre-pandemic levels.
The EURUSD is currently above the 1.2000 psych level and last week's price action has created a swing low support, which itself could act as a springboard to higher highs. The swing high from the 29th April will be the most logical target for traders to try and reach for today, assuming the US dollar weakens dramatically on the back of the employment data.
The Reserve Bank of Australia statement on Monetary Policy stated the central bank would not raise rates until inflation is within their target range which they don’t predict will happen until 2024. Though they are seeing that the economy is beating forecasts, with GDP likely to be back to pre-pandemic levels in 2021.
The ActivTrader sentiment indicator shows that 75% of traders are currently bearish the AUDUSD currency pair.
While the price action is currently trying to keep its head above the daily Ichimoku cloud indicator. If today's close is above yesterday’s high, this will be a bullish confirmation that the 0.7725-0.7760 range has been rejected.
Later today we have a highly anticipated jobs number from the US and the employment data out of Canada. In Canada job numbers are expected to fall but, in the US, there is an expectation of jobs beating last month’s figures, getting closer to the +1 million figure. A disappointment in the US number will be the biggest risk today.