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Australian Dollar Gains on Huge Trade Beat, But Details Weigh

Australian Dollar Gains on Huge Trade Beat, But Details Weigh

David Cottle, Analyst


Talking Points:

  • Australia’s May trade balance data came in at well over double the surplus expected
  • The Australian Dollar duly gained
  • However the data details didn’t all live up to that blockbuster headline

How will your favorite currency fare in the third quarter? The new DailyFX forecasts for all major traded currencies are out. Take a look here

The Australian Dollar got a boost Thursday after May’s trade balance figures simply blew the markets’ forecasts away.

The overall balance – that’s export value minus imports – came in at A$2.471 billion (US$1.88 billion), when the markets had only been looking for a figure of A$1 billion. Exports surged 9% on the month, helped especially by coal, official figures showed, while imports rose by 1%.

However, April’s seasonally adjusted surplus was revised lower and it looks as though net exports still have some work to do if they are not going to be an overall drag on second-quarter growth. This realization may account for AUD/USD’s modest and short-lived bounce on the data, despite the enormous headline beat.

And there are few if any monetary-policy implications. The Reserve Bank of Australia shows no inclination to join the more hawkish chorus ringing from some other developed-market central banks and maintained its primary focus on labor and housing markets rather than trade, important though it is.

Interest rate futures markets have started to price in very gradually higher interest rates from well into 2018 but predict no near-term changes to the Official Cash Rate’s current, 1.5% record low.

--- 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.