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Early Thursday morning in Asia at 00:30 GMT markets will see Australia’s January month Trade Balance numbers. Some from the analyst fraternity now give less care about the second-tier data, especially after the RBA’s 0.25% rate cut. However, the Aussie PM Scott Morrison also showed readiness to announce fiscal stimulus and is yet in his cupboard. Hence, any incoming data will be the key for the AUD/USD pair traders.

Market expectations favor a downbeat reading of Trade Balance, to 4,8000M from 5,223M prior. Details suggest that Imports and Exports reported 2% and 1% respective figures during the previous month.

Analysts at TD Securities offered details of market expectations in their report saying,

The Trade Balance has been fairly stable over recent months and we expect an outcome similar for January to previous prints. Exports are likely to be supported on higher iron ore volumes but offset by growth in import volumes. We pencil in a trade surplus of A$5b.

Westpac also has a say for the data while mentioning:

Australia’s January trade balance is expected to print at $5.4bn (market $4.8bn). Although down from its record high in June, the trade surplus remains sizeable, and strength should be seen in gold and iron ore prices. The risks are around import and export disruptions from COVID-19.

How could it affect AUD/USD?

As mentioned earlier, the recent rate cuts from the Fed and the RBA aren’t the final efforts of respective policymakers to counter the coronavirus (COVID-19). They still have fiscal measures to use. It should also be noted that Australia’s Treasury Secretary recently hinted downbeat impacts of the COVID-19 and bushfires on the economy, which in turn hikes the odds for further stimulus. As a result, traders will be taking a serious note of all incoming data to predict the near-term AUD/USD moves.

Technically, A descending trend line since January 01, 2020, at 0.6800, followed by 100-day SMA around 0.6835, guard the near-term upside of the pair while sellers will enter below the monthly low surrounding 0.6680.


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About Australian Trade Balance

The trade balance released by the Australian Bureau of Statistics is the difference in the value of its imports and exports of Australian goods. Export data can give an important reflection of Australian growth, while imports provide an indication of domestic demand. Trade Balance gives an early indication of the net export performance. If a steady demand in exchange for Australian exports is seen, that would turn into a positive growth in the trade balance, and that should be positive for the AUD.