Quick Bites | Australia’s International Trade & the AUD

Australia’s goods trade surplus fell to A$5.8bn in May (from $6bn in April), a little below expectation. The decline was driven by a rebound in imports, partly reflecting higher fuel prices.

Goods export values increased +2.8% month-on-month (mom), with a rebound in metal ores (+6.3% mom) offsetting declines across coal (-0.2% mom) and rural goods (-1.2% mom).

Goods import values rebounded +3.9% mom, driven by increases in consumption goods (+2.4% mom) and intermediate goods (+6.6% mom). The latter increase was driven higher fuel imports (+10.8%mom), consistent with the rise in global oil prices in the month. Outbound shipments to the country’s largest trading partner, China, surged by 15.8%, rebounding sharply from a 6.3% drop in April.

Goods imports rebounded in May

Source: Goldman Sachs

The Australian Dollar (AUD) rose past the $0.67 mark in July, its strongest since the start of the year as the divergence in the policy outlook between the RBA and the Fed widened following a batch of economic data releases. Minutes from the RBA’s latest meeting revealed that policymakers stressed the need to remain vigilant about upside risks to inflation, adding that a material rise in prices could require significantly higher rates. After the meeting, the monthly CPI pointed to a higher-than-expected inflation rate of 4% in May. Additionally, Australia’s monthly retail sales growth hit a four-month high in May, while private sector activity remained expansionary in June.

AUD over the past 12 months

Source: Trading Economics