The Australian Dollar has slipped gradually lower from Tuesday’s high of USD0.7835. The fall hasn’t been dramatic by any means but three times it has slipped back on to a US 77 cents ‘big figure’ and the price action suggests the downside may be the more vulnerable. Against the Canadian Dollar, meantime, the Aussie is around 40 pips down from Wednesday’s 1.0135 high, having broken above parity on Monday for the first time in more than 6 months.
Australia’s latest monthly trade figures were released overnight. The headlines were much better than expectations, with a $1.05 billion surplus, a more than $2 billion turnaround on the $1.1 billion deficit the month before. Details showed a 4.3% m/m jump in exports whilst imports fell -2.4%. Digging a little deeper in to the numbers, around three-quarters of the surplus was made up by a $770 million contribution by gold, with exports jumping 54 per cent over the month. A $208 million jump in the export of transport equipment also improved the monthly picture. Elsewhere, iron ore (+0.6% m/m) and coal (0.0% m/m) added little to exports growth, although last month’s figures were revised up slightly. According to CBA, generally stronger commodity prices so far this year point to another solid result next month and an improvement in the terms of trade — the ratio of the prices received for exports to prices paid for imports. "This will provide a short-term boost to nominal GDP and therefore national income."
The latest foreign exchange survey from Reuters showed the median forecast of 41 analysts is for the AUD/USD exchange rate at 78 cents in one, three and six months’ time. This would be an unusually flat profile for the typically volatile currency pair. Over 2017, for example, the Aussie went from as low as 0.7165 to as high as 0.8125 before ending the year just above $0.7800 where it currently sits. The median forecasts, however, disguise a wide range of views about the AUD. Looking at the one-year time horizon, the range of expectations is between 70 and 86 US cents. The Australian Dollar opens in North America this morning at USD0.7795, with AUD/NZD at 1.0740 and AUD/CAD1.0095.