When is Australian Trade Balance and how could it affect AUD/USD?

Early Thursday morning in Asia at 01:30 GMT markets will see Australia’s May month Trade Balance numbers. Although the trade statistics have recently slipped from their top-tier catagory, AUD/USD traders will keep eyes on the figures considering the latest softness in the quote in contrast to the recently published upbeat data.

Market expectations favor price-positive readings of Trade Balance, to 9,0000M from 8,800M prior. Details suggest that Imports and Exports reported -9.8% and -11.3% respective figures during the previous month.

Analysts at TD Securities offered details of market expectations in their report saying,

We expect another healthy trade surplus in May of A$8b thanks to robust iron ore exports (volumes +5% and prices +12%) while we expect an easing in lockdown measures likely to drive a normalization in goods imports. Supporting a firmer surplus is the likelihood that service imports are soft in light of travel restrictions.

Westpac also has a say for the data while mentioning:

Australia is sure to post another large trade surplus for May, given the preliminary goods trade data showed resilient resources exports and soft demand for imports. Today’s report includes services which of course have collapsed, both inbound and outbound tourism and education. Both Westpac and the market expect an increase to A$9.0bn from $8.8bn in April.

How could they affect AUD/USD?

Considering the contrasting moves of the aussie pair, in comparison to the Australian and Chinese PMI data, market players are looking for extra details to forecast near-term AUD/USD moves. In doing so, a magnified reaction could be given to the downbeat figures while looking at the market risks emanating from the US coronavirus (COVID-19) conditions and the Sino-American tension. However, this doesn’t rule out the pair’s ability to extend the previous three-day winning streak on highly optimistic data.

Technically, a clear break above a three-week-old falling trend line favors the bulls to aim for 0.6975 and 0.7000 numbers to the north. However, RSI conditions might question the bulls afterward. On the downside, the pair’s declines below 0.6900 could recall sellers targeting 0.6860 support confluence including 21-day EMA and an ascending trend line from June 15.

Keynotes

AUD/USD: Cheers risk-on mood above 0.6900 but upside momentum fizzles

AUD/USD Forecast: Struggling to rally beyond the 0.6900 threshold

About Australian Trade Balance

The trade balance released by the Australian Bureau of Statistics is the difference in the value of its imports and exports of Australian goods. Export data can give an important reflection of Australian growth, while imports provide an indication of domestic demand. Trade Balance gives an early indication of the net export performance. If a steady demand in exchange for Australian exports is seen, that would turn into a positive growth in the trade balance, and that should be positive for the AUD.