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Global Macro: China Data Brighten Outlook

Andrew Sachais

NEW YORK ( TheStreet) -- Chinese data provided a catalyst for bullish moves in Russian equities and the Aussie dollar on Monday.

Chinese data are filling the gap for a relatively light week for U.S. economic news. Trade data from China released early Monday morning showed that export numbers exceeded market expectations, a signal that efforts by the Chinese government to stabilize the economy are working.

On Tuesday morning, China will release industrial and retail numbers, which should weigh on trader sentiment at least at the opening bell and in U.S. futures trading.

The Russian economy is heavily dependent on oil production and services. This industry is showing relative strength and was similarly aided by strong Chinese data.

Meanwhile, violence is Syria was responsible for a large run-up in oil prices, which alongside fundamental data has helped push commodities and Russian equities to monthly highs.

On a technical level, the Market Vectors Russia ETF , pictured below, has formed an inverse head-and-shoulders pattern on the daily chart.

Continued strength in the oil sector and bullish investor sentiment surrounding Russia could lead to a break higher in this exchange-traded fund and a move toward overhead resistance at yearly highs.

The last chart is of CurrencyShares Australian Dollar Trust . The Aussie dollar is in a similar situation to Russian equities, as it is heavily influenced by China and commodities.

Australia is a big exporter to China, and its currency has caught a bid higher as strong data improved investor outlook on the Chinese economy.

Also bullish for the Aussie dollar was the Reserve Bank of Australia's decision to hold the cash rate at its current level in recent weeks. With previously weak economic fundamentals, that decision was a positive sign that policymakers believe in the recovery of Australian economic growth.

Similarly, commodity indexes have been forming strong bottoming patterns, fueling the strength of emerging economies and currencies. A double bottom seen in the GreenHaven Continuous Commodity Index signals that the resurgence of investor belief in global growth could be on the horizon.

The technical picture of the Aussie dollar shows a strong double-bottom pattern, as well. This pattern alongside the fundamentals mentioned above could lead to a break higher in the currency and a transition into a bullish trend upward.

At the time of publication the author had no position in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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