In our overnight commentary for the Australian time-zone, (OFX never sleeps!) we said that, “AUD/USD remains below all four of its main moving averages (20, 50, 100 and 200 day) but at some point this sideways range will be broken, perhaps dramatically”. We previewed the upcoming trade figures, noting that, “consensus expectations are for a seasonally adjusted monthly trade surplus around $1,200m after +$989m in August and +$808m in July”.
The actual number was much better than expected with a $1,745 surplus being the largest since May; benefiting from essentially flat imports but a pretty decent 3% rise in exports. This now completes the three monthly snapshots which will go into the Q3 GDP numbers and it seems that net trade will make a pretty decent contribution to growth in the quarter.
Before getting too carried away, note the trade balance is often a misleading indicator of domestic demand (as its obviously mainly an export story) and the mining and LNG sector is not a huge employer so there’s no strong and immediate link back to spending at home.
Nonetheless, good news is good news and after more than a week of poor price action amidst liquidation of long positions, the AUD finally caught a bid overnight and moved at last back on to a 77 US cent handle for the first time in a week. GBP/AUD is more than a cent down from its recent 1.7358 high and we now await Fridays Aussie retail sales numbers for more clues.