The U.S. Dollar Index held close to a recently struck 3-year high after a release of unexpectedly dismal trade data from China confirmed speculation that the economy there is slowing. According to the report from China’s National Bureau of Statistics, exports fell 3.1% in the second quarter while imports declined 0.7%, against analysts’ expectations of 0.8% and 0.4% growth, respectively. Commodity-linked currencies struggled in general, thou the data weighed heavily on the Australian Dollar, as the Aussie economy is heavily reliant on China as its key export destination.
Expectations of the slowdown in China which are likely to spread across the globe have helped to support the U.S. Dollar as the Federal Reserve is now one of the very few major central banks tightening monetary policy. Later today, the minutes from June’s policy meeting will be released and should reinforce that hawkish view. As reported at 1:17 p.m. (JST) in Tokyo, the U.S. Dollar Index was trading at 84.640 .DXY, close to Tuesday’s peak of 84.753 .DXY. The EUR/USD pair traded at $1.2777, not far from a 3-month low struck on Tuesday. The AUD/USD pair slipped to $0.9125 shortly after the data release, but recovered slightly to trade at $0.9176.