AUD/USD: Trading the Australian Trading Balance

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Australian Trade Balance is closely linked to currency demand and is a key indicator. A reading which is higher than expected is bullish for the Australian dollar.

Here are all the details, and 5 possible outcomes for AUD/USD.

Published on Tuesday at 1:30 GMT.

Indicator Background

Australian Trade Balance measures the difference in the value of imported and exported goods on a monthly basis. An unexpected reading can have a significant impact on the movement of AUD/USD.

In January, the trade surplus narrowed to A$1.30 billion, short of the estimate of A$3.82 billion. The surplus is expected to climb to A$1.75 billion.

Sentiments and levels

With the RBA unlikely to make a move this week, monetary divergence favors the US dollar. The US economy continues to fire on all cylinders, so sentiment remains favorable for the US dollar. So, the overall sentiment is bearish on AUD/USD towards this release.

Technical levels, from top to bottom: 0.7938, 0.7835, 0.7741, 0.7605, 0.7513 and 0.7429

5 Scenarios

  1. Within expectations: A$1.55 billion to A$1.95 billion. In such a scenario, the AUD/USD is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: A$1.96 billion to A$2.15 billion: An unexpected higher reading can send the pair below one support line.
  3. Well above expectations: Above A$2.15 billion: The chances of such a scenario are low. Such an outcome could send AUD/USD downwards and a second support line might be broken as a result.
  4. Below expectations: A$1.35 billion to A$1.54 billion: A smaller decline than expected could push the pair above one resistance line.
  5. Well below expectations: Below A$1.34 billion. In this scenario, AUD/USD could break above a second resistance line.

For more on AUD/USD, see the Australian dollar forecast.

Get the 5 most predictable currency pairs

About Author

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.

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