China's trade data is weak, and the USD fixing rate against the RMB is weaker than expected😐
Yesterday's markets began with a distinctly risk-off tone on weak China trade data (exports -14.5%, imports -12.4%, exports to US fell 23% YoY), just a day after the country's foreign direct investments fell to the lowest levels in 25 years. Shortly after, embattled developer Country Garden announced that they have not paid two dollar bond coupons totaling $22.5 million, triggering 30-day grace periods and leading to renewed concerns about the China recovery trade.
Traders rushed to hedge downside risks on Chinese exposures, while USD-CNY FX options were the most active traded pairs (>$18bln) in global FX yesterday based on DTCC/Bloomberg data as the official USD/CNY fix came in much weaker than expected at above 7.15.
