2016 Chinese Trade Disappoints

Although financial markets were full of anticipation leading up to the first press conference of President-elect Donald Trump for 2017, the event was largely a snoozer as no details about fiscal policy plans and tax reform were forthcoming.  However, remarks from key Federal Reserve officials showed that the only disagreement amongst members was not about raising rates, but how quickly.

The dollar remained under pressure throughout the week, pushing gold prices back above $1200 per troy ounce as haven assets remained bid.  Besides speeches in the US, attention was focused on Chinese fundamentals after the trade surplus shrank to the lowest point since March and consumer inflation failed to continue its trend higher.

With exports tumbling following a positive print back in November combined with the annualized downtick in Chinese dollar-denominated trade, Chinese policymakers will have their work cut out for themselves as they attempt to maintain higher growth.  Meanwhile, the Turkish Lira continued to be the worst performing currency as a downgrade from Fitch looms large over the economy.  The Pound fell to multi-week lows as the uncertainty surrounding the UK government’s Brexit position continued to create a sense of anxiety.