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According to Sean Callow, analyst at Westpac, AUD’s support from exports is surely a lot stronger than most would have expected when President Trump picked a trade fight with China last year.

Key Quotes

“Australia’s Jan trade surplus was the 2nd largest on record, with the Dec surplus. Exports are up 16%yr and the current account deficit is just -1.5%/GDP vs a 30 year average of -4.2%. In this context, the progress of US-China trade talks may not be so important.”

“But while Australia’s stronger external position lends background support to A$, there wasn’t a lot to like about Australia’s Q4 GDP report. Weak Jan retail sales reinforced worries about the consumer.”

“Market pricing for RBA easing stepped substantially lower this week, knocking AUD/USD to post-flash crash lows. But pricing by end-2019 of -32bp could well extend further in coming weeks, opening up a probe of 0.6950. The pivotal data in this regard should be unemployment, with 21 March the next release (Feb).”