Aussie faces challenge as Chinese import slows down

Aussie bull once again failed to break above key resistance around 0.80 as dollar strengthen last night over bund yields drop. Today's Chinese trade statistics provided further blow to Aussie bulls.

• Chinese trade balance reached record high around $34.13 billion, driven by big size drop in imports. Imports dropped -16.2% y/y while exports dropped -6.2% on yearly basis.

Australia remains major exporter to China of raw materials namely coal and iron ore. Chinese data continue to pose weakness which has remained concern for Australian bulls.

Changing nature of Australian commodity portfolio -

Recent trend statistics show that Australian economy is diversifying its trading partners along with its commodity portfolio.

• Australia now stands as a major supplier of Liquefied Natural Gas (LNG) to Japan and according to Reserve Bank of Australia's (RBA) LNG exports which have slowed down due to lower oil price would rebound soon enough during latter half of 2016. LNG's share in Australian export would rise to 11% by 2019/20 from current 5%. That would earn Australian about $50 billion in revenue.

For today, focus is on US non-farm payroll report for April. Weaker than expected NFP might provide the cues to Aussie to break free of 0.80 area. Better job report would push it lower to test the range low once more.

As of now, Aussie is trading at 0.791 against dollar.