AUDUSD: Trading the AUD Trade Balance April 1 2013

Australian Trade Balance, released monthly, measures the difference in value between imported and exported goods.  The indicator which provides important data about the  health of the Australian export industry, a crucial sector of the economy.  A reading which is higher than the market forecast is bullish for the Australian dollar.

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

Published on Wednesday at 00::30 GMT.

Indicator Background

Trade Balance is directly linked to currency demand, as a better Trade Balance figure means foreigners are purchasing more Australian dollars to buy Australian exports. This release should be treated as a market-mover which can affect the movement of AUD/USD.

Australia continues to post a trade balance deficit, which widened in March from 0.43 billion dollars to 1.06 billion dollars. The estimate for the April reading is largely unchanged, at an even 1.00 billion.

Sentiment and Levels

The month of March was kind to the Australian dollar, as the AUD/USD gained closed to two cents, but ran out of steam in the last week in March. The Cyprus crisis made investors jittery around the globe, and uncertain markets do not bode well for risky currencies like the Aussie. We’re unlikely to see any changes to rates by the RBA this week, so much will depend on the Retail Sales and Building Approval releases – if the numbers are solid, the Australian dollar will likely get a boost. So, the overall sentiment is  neutral on AUD/USD towards this release.

Technical levels from top to bottom: 1.0739, 1.0605, 1.0508, 1.0416, 1.0371 and  1.0326.

5 Scenarios

1. Within expectations:  0.97B to 1.3B: In this scenario, AUD/USD could show some slight fluctuation, but it is likely to remain within range, without breaking any levels.
2. Above expectations: 1.4B to 1.7B: A strong reading could push the pair above one resistance level.
3. Well above expectations:  Above 1.7BK:  In such an outcome,  AUD/USD would likely push upwards, and two or more resistance lines can be broken.
4. Below expectations:  0.93B to 0.96B: A lower than expected reading could pull the pair downwards, with one support level at risk.
5. Well below expectations: Below 0.93B: A very poor reading will hurt confidence in the Aussie and AUD/USD could break two or more support levels.

For more on the Aussie, see the AUD/USD forecast.

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