News Column

Aussie Falls As Australia Trade Deficit Widens

July 1, 2014



CANBERA (Alliance News) - The Australian dollar weakened against the other major currencies in the Asian session on Wednesday after the release of a report showing wider-than-expected trade deficit for the nation in May.

The Australian Bureau of Statistics said that the Australia posted a merchandise trade deficit of AUD1.911 billion in May-marking an increase of AUD1.131 billion or 145% on the April deficit.

The headline figure was well shy of forecasts for a deficit of AUD200 million following the downwardly revised AUD780 million deficit in April.

Exports were down AUD1.30 billion or 5.0% on month to AUD26.681 billion.

The currency advanced on Tuesday after the Reserve Bank of Australia decided to maintain cash rate at 2.5% for the 11th consecutive month.

The Australian dollar fell to 0.9458 against the US dollar, 1.4456 against the euro and 1.0062 against the Canadian dollar, from early highs of 0.9497, 1.4398 and 1.0098, respectively. If the aussie extends its downtrend, it is likely to find support around 0.93 against the greenback, 1.46 against the euro and 0.99 against the loonie.

Moving away from an early multi-week high of 1.0836 against the NZ dollar, the Australian dollar eased to 1.0800. At yesterday's close, the aussie was trading at 1.0814 against the kiwi. The next possible downside target for the aussie-kiwi pair lies around the 1.06 level.

A survey by ANZ showed that the New Zealand's commodity prices fell for the fourth consecutive month in June. The ANZ commodity price index decreased 0.9% on month in June, reaching its lowest level in fifteen months. This follows the 2.2% decline in May.

Against the yen, the aussie slipped to 96.11 from an early high of 96.44. The pair was quoted at 96.38 at yesterday's close. The aussie may test support near the 95.04 zone.

The Bank of Japan said that the monetary base in Japan surged 42.6% on year in June-coming in at 233.246 trillion yen. That follows the 45.6% spike in May.

Looking ahead, Eurozone PPI for May is due in the European session.

The US ADP private sector employment report for June and factory orders for May are due to be released in the New York session.

At 9:00 am ET, the RBA Assistant Governor (Financial Markets) Guy Debelle will deliver a speech at the Financial Times Camp Alphaville Conference, in London.

At 11:00 am ET, USFederal Reserve Chair Janet Yellen will deliver a lecture at the International Monetary Fund, in Washington DC.



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Source: Alliance News


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