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Australian Trade Balance, which is released monthly,  measures the difference between imported and exported goods and services.  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 Tuesday at 00:30 GMT.

Indicator Background

Trade Balance is closely linked to currency demand, as foreigners must purchase Australian dollars in order to buy the country’s exports.

Australia continues to post trade deficits, and the November figure of -0.53 billion dollars was much higher than the estimate of -0.38 billion. The markets are expecting an improvement in December, with  a forecast  of -0.30 billion.

The Australian dollar has struggled lately, and we could see this trend continue. The RBA is keen  for the  Aussie to  remain below  the  0.90 level  and will likely try to  “talk down” the currency.  With QE taper a reality in the US, we can expect further taper moves by the Fed in the near future, which will likely give a boost to the US dollar.  So, the overall sentiment is bearish on AUD/USD towards this release.

Technical levels from top to bottom: 0.9283, 0.9180, 0.90, 0.8893,  0.8728 and 0.8578.

5 Scenarios

  1. Within expectations: -0.45B to -0.15B: 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: -0.14B to 0.25B: In this scenario, the pair could push above one resistance   level.
  3. Well above expectations: Above 0.25B: A  larger  than expected surplus could propel AUD/USD upwards, and  a second  resistance line could be broken.
  4. Below expectations: -0.85B to -0.46B: A lower than expected reading could pull the pair downwards, with one support level at risk.
  5. Well below expectations:  Below -0.85B: A  larger than expected  deficit  is bearish for the Aussie and  AUD/USD could break  below a  second support level.

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

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