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 Thursday at 00:30 GMT.
Indicator Background
Australian Trade Balance is 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 deficit ballooned to A$-0.98 billion, compared to A$-0.44 billion a month earlier. The estimate stood at A$-0.94 billion. The markets are expecting the downward trend to continue, with an estimate of A$-1.25 billion for the February report.
Sentiments and levels
The Aussie has struggled in 2015, and could be in for more trouble. US data is expected to improve after some weak numbers last week, and monetary divergence will continue to weigh on the Australian currency. So, the overall sentiment is bearish on AUD/USD towards this release.
Technical levels, from top to bottom: 0.7978, 0.7799, 0.7692, 0.7601, 0.7403 and 0.7283.
5 Scenarios
- Within expectations: A$-1.40 billion to A$-1.10 billion. In such a scenario, the AUD/USD is likely to rise within range, with a small chance of breaking higher.
- Above expectations: A$-1.09 billion to A$-0.95 billion: An unexpected higher reading can send the pair above one resistance line.
- Well above expectations: Above A$-0.94 billion: The chances of such a scenario are low. Such an outcome could push AUD/USD upwards, and a second resistance line might be broken as a result.
- Below expectations: A$-1.55 billion to A$-1.41 billion: A reading short of expectations could push the pair below one support level.
- Well below expectations: Below A$-1.55 billion. In this scenario, AUD/USD could break below a second support level.
For more on AUD/USD, see the Australian dollar forecast.
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