Australian Dollar Slips On Much Narrower Trade Surplus
- Australia’s trade surplus missed expectations by a very wide margin in January
- The Australian Dollar took a hit; trade data disappointments have been rare lately
- Building approvals perked up on the month, but looked very weak when annualized
The Australian Dollar hit a wall on Thursday following the release of weaker than expected trade-balance data for January.
The country’s trade surplus limped in at A$1.3 billion (US$1 billion). That was very much below the A$3.8 billion expected and December’s A$3.5 billion showing. Australian imports rose strongly on the month in January, rising by 4%, while exports slipped by 3%. It’s likely but not certain that exports of raw materials to China slackened during the month in anticipation of the long Chinese Lunar New Year break. If proven this may render the data less worrying than it might at first appear.
Still, AUD/USD’s reaction was immediate, it slipped to 0.76938 right after the release, from 0. 76650 just before it.
Taking a hit: AUD/USD
However, the pair remains well within its recent range. It was supported on Wednesday by the admittedly well-flagged news that Australia’s economy had avoided technical recession in 2016 by returning to growth in the final quarter.
Data released at the same time as the trade balance showed that building approvals rose sharply on the month in January, but remain firmly in an annualized downtrend. Approvals rose by 1.8% compared to December, when a 0.5% fall had been expected. However, they were down a chunky 12% from January 2016.
How are DailyFX analysts’ forecasts for the first quarter holding up? You can find out here.
--- Written by David Cottle, DailyFX Research
Contact and follow David on Twitter:@DavidCottleFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.