THE TAKEAWAY: Australian trade deficit widens for fifth straight month > Forex traders likely to focus on RBA rate decision tomorrow > Aussie trades slightly higher
The Australian Dollar traded slightly higher as Australia’s trade deficit widened for the fifth consecutive month highlighted by flagging exports to all three of its largest trading partners: China, Japan and the U.S. The Australian Bureau of Statistics reported the flow of goods declined to China by -4 percent, Japan by -13 percent and the U.S. by -21 percent in September which should continue to be cause for concern by central bankers as an elevated exchange rate and global slowing were recently noted as the biggest headwinds facing the Aussie economy.
Meanwhile, domestic spending showed signs of strength as consumer spending for retail related items increased slightly by +0.5 percent in September. The labor market showed weakness as measured by shrinking job advertisements which fell by -4.6 percent in October.
Forex traders likely bought the Aussie currency due to possible rising trendline support established around 1.0331 area. Looking ahead, FX markets are likely to focus on the Reserve Bank of Australia’s rate decision tomorrow at 3:30 GMT. Currently Forex traders appear to be pricing in a 54 percent probability of a 25 basis point cut to rates by the RBA during their meeting Tuesday.
AUD/USD, 4 Hour Chart