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Australian Trade Balance Narrows Further as Global Growth Slows

Published 12/31/2000, 07:00 PM
Updated 01/07/2009, 08:08 PM

Release Explanation: The trade balance figure is simply the difference between the amount of export and imports of Australian goods and services for the reported month with Australia and other foreign trade partners. Subsequently, when exports are greater than imports, or positive net exports, a trade surplus is created. However, when imports are greater than exports, a deficit is created. Simply put, here, there is more money leaving the country than actually coming in. As a result, the report is taken into heavy consideration as it indicates flow of goods and services and stand as one of the biggest components of the Balance of Payments report.
 
Trade Desk Thoughts: Australia has posted a lower than expected trade balance for the month of November. In seasonally adjusted terms, the surplus was A$1.45 billion; this is a decrease from October’s A$2.95 billion. This softening of the trade balance goes to reinforce Glenn Stevens, Australia’s central bank Governor, view that the economy will be hurt by waning global demand, and the trade balance may narrow further in the coming months as economic growth slows. Exports fell 4 percent while iron ore and mineral shipments fell 13 percent.
 
Forex Technical Reaction: The Australian dollar has been fallen in reaction to this report. Currently the pair is situated near the low of the previous day which is slightly above the new LFB S1 support area at .7055.

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