The latest trade figures from China offer some temporary relief as the decline in exports is not as significant as before.

1. "The rate of decline in China's exports slowed down in August, indicating a potential improvement in demand."

2. "However, despite the smaller decline, exports from China are still far below typical levels, creating uncertainty among investors regarding the country's economic outlook."

3. "Against the backdrop of the current macroeconomic situation, Philip Lowe, the RBA Governor, is expected to deliver his final speech."

Concerns Persists as China's Trade Terms Display Incremental Improvement

China's economy has come under scrutiny following Tuesday's unsettling Services PMI report, which raised concerns about potentially weaker exports due to lackluster overseas demand. However, the latest trade data revealed a marginal improvement in trade terms for China, albeit with lingering concerns.

In August, China's exports witnessed a decline of 8.8% compared to the previous year, while imports fell by 7.3%. Although this decline signifies a slowdown, it was less severe than the previous month's figures, where exports plummeted by 14.5% and imports dropped by 12.4%. Consequently, the trade surplus in dollars narrowed from $80.60 billion to $68.36 billion.

Economists had predicted a narrower trade surplus of $78.00 billion, with anticipated year-over-year declines of 9.8% and 8.8% in imports and exports, respectively. The actual figures deviating from these forecasts underscored the uncertainty surrounding China's economic outlook.

Simultaneously, Australia also experienced challenges in its trade sector. The country's trade surplus decreased from A$10.268 billion to A$8.039 billion in July. Exports declined by 2.0%, while imports increased by 2.5%, reflecting deteriorating trade terms for the nation.

These trade developments have had an impact on the currency markets, particularly the Australian dollar (AUD). Prior to the release of China's trade figures, the AUD/USD pair briefly rose to a pre-stat high of $0.63851 before falling to a low of $0.63667. Following the announcement of China's trade data, the AUD/USD saw a modest recovery, reaching a post-stat high of $0.63711 before declining to $0.63666.

Looking ahead, market participants will closely monitor Philip Lowe's final speech as the Governor of the Reserve Bank of Australia (RBA). His remarks on the economic outlook and monetary policy are expected to provide insights into the central bank's approach going forward. Speculation abounds as to whether the RBA will conclude its monetary policy tightening cycle.

In addition, the release of US labor market numbers and speeches by members of the Federal Open Market Committee (FOMC) will draw significant interest throughout the day. Robust labor market conditions, compounded by the stronger-than-expected US ISM Non-Manufacturing PMI, could fuel expectations of a potential rate hike by the Federal Reserve.

Investors will pay particular attention to speeches by FOMC members Bowman, Harker, and Fed Vice Chair John Williams. Given his influential position, Williams' statements will likely carry weight in shaping market sentiment. Should the comments lean towards a hawkish stance, advocating for further rate hikes, riskier assets may face downward pressure.