Sell Side Sees Upside Risks To Trade Data

The yuan strengthened to the highest this week against the greenback, USD/CNH heading into the US close around 6.4645, a few key data releases will hit the wires tonight with Caixin China PMI Services due at 0230BST/0930HKT, and April trade data due during the session but with no fixed time.

• CBA sees a chance of an upside miss: "Strong Chinese trade data can weigh on USD/CNH. China's export sector is one of the key beneficiaries of the surge in US consumer spending. At the same time, the improving Chinese domestic economy is supporting a recovery in imports. The Bloomberg consensus if for China's trade surplus to rebound to $US27.7bn in April from $US13.8bn in March."
• JP Morgan are more bullish than consensus: "China's March exports surprised on the downside, falling 7.4% m/m sa, following the jump of 5.1% m/m sa and 9.7% m/m sa in January and February, respectively. The notable monthly volatility in export activity during 1Q21 may partly reflect Lunar New Year-related distortion, especially as migrant workers chose not to return to their hometowns during the holiday this time, hence boosting February exports, with partial payback in March. We expect April exports to grow 0.5% /m sa, or 27.8% in over-year-ago terms."
• Goldman Sachs too sees strong momentum in exports: "We expect year-over-year export growth to recover to 33% yoy from 30.6% yoy in March. Global demand has been strong in the past two months, and the strong rebound of Caixin manufacturing PMI (we found the Caixin manufacturing PMI had a closer correlation with export performance) in April also points to strong growth momentum of exports. Our forecast implies 10% month-over-month non-annualized growth in April, vs -6.6% in March. We expect year-over-year import growth to accelerate slightly to 39%, from 38% yoy in March. Higher oil prices and solid domestic demand support import growth, and the first 20-day data from Korea also suggests stronger Chinese imports growth in April vs March. However in April, imports also faced some headwinds: the blockage of Suez Canal in late March might delay some imports from April to May."