In October, China’s exports fell significantly. They dropped from a growth rate of 8.4% to a decline of -0.8%. This shift indicates a shrinking trade surplus, which affects related currencies and economic measures. This narrowing trade surplus is influencing foreign exchange markets. Currencies like NZD/USD and the Australian dollar have both begun to weaken. At the same time, other markets such as gold and major currency pairs like EUR/USD and GBP/USD are responding to wider economic factors beyond China’s trade situation.

Impact of China’s Export Decline

The sudden drop in China’s October exports from 8.4% growth to -0.8% contraction serves as a strong indicator. This isn’t just a minor downturn; it shows that global demand for goods is weakening much faster than we expected. We may see increased volatility and a shift in market sentiment in the coming weeks. This decline directly affects the currencies of countries closely linked to China, particularly Australia and New Zealand. Over 30% of Australia’s exports typically go to China, making the Australian dollar especially susceptible. Looking back at 2015-2016, fears of a slowdown in China caused a significant drop in the AUD, and we might see a similar pattern this time. The slowdown also means lower demand for industrial commodities, impacting prices for copper and iron ore. Copper has already dipped below $8,100 per tonne this past month, and this news could speed up that decline. We should think about using options to prepare for further declines in commodity markets and in stocks of major mining companies.

Safe Haven Capital Flow

In this situation, investors will likely move their money toward safe-haven assets. Gold is showing strength, and the US dollar is expected to draw buyers looking for stability. This weak data also raises the chances of a Federal Reserve rate cut in the first half of 2026, which can be evaluated through interest rate derivatives. We should also pay attention to equity markets, especially companies that rely heavily on Chinese consumers. Recent reports from European luxury brands and German car manufacturers indicated slowing sales in the region last quarter. This export data confirms that trend, making put options on these particular stocks or indices like Germany’s DAX a smart hedge. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now