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Annette Beacher, Chief Asia-Pacific Macro Strategist at TD Securities, notes that in contrast to median expectations, Australia’s June quarter export and import prices rose sharply, by +1.9%/q (mkt -1.3%) and +3.2%/q (mkt 1.9%) respectively.

Key Quotes

“Prices received for commodity exports were strong: Gas +10.8%/q via strong demand in northern Asia, and LNG contract prices are influenced by oil with a 2-4 month lag so expect further buoyancy in this space.”

“Less of a story for imports: Petroleum jumped +13.7%/q and Industrial machinery rose +3.3%/q via higher metal prices.”

“This unexpected broad-based leap in hard and soft commodity export prices is encouraging for trade and economic growth.”

“Even if the terms of trade fell -1%/q, the annual pace jumps to 2.5%/y given favourable base effects.”