On Thursday (07 / May), the Australian Bureau of Statistics published March Trade Balance data which had a surplus of AUD10.6 billion, rocketing 174 percent compared to the previous period's surplus of only AUD3.87 billion.
This morning's trade balance data release was quite impressive because it was better than expectations of AUD6.4 billion. This surge was supported by increased shipments of goods to China after the country's economy was reopened after the lockdown in February.
Overall, Australia's total exports last month totaled AUD42.4 billion, while imports amounted to AUD31.8 billion. Iron ore exports jumped 30 percent to AUD11.6 billion, followed by coal and natural gas commodities which also recorded a solid increase.
Not wanting to be left behind, Gold Exports soared by 225 percent to AUD3.6 billion throughout March. This positive development has the potential to provide a boost to the Australian economy which is currently amid a slowdown due to the Covid-19 pandemic.
"By seeing a positive trade surplus, we predict (this) will contribute to the first-quarter GDP growth of 0.4 percent. We see a surge in commodity exports to China can cover economic growth amid declining imports ... So that "is likely to make a positive contribution to the second-quarter GDP data," said Ben Udy, an economist at Capital Economics.
Policies Issued By RBA
The positive release of Australia's Trade Balance data in March seemed to provide a glimmer of hope amid the downbeat economic conditions there. For information, the Australian Central Bank (RBA) has warned that economic output in the first half of this year is likely to fall by 10 percent, while the unemployment rate is predicted to surge.
AUD / USD pair was at 0.6418 or gained 0.32 percent from the daily Open price. The slick release of the Australian Trade Balance data helped bolster AUD movements against the USD to stay away from daily lows, which were previously touched at the start of today's trading session at around 0.6379.
In a recent statement, RBA Chair Philip Lowe said that the Australian economy was currently in a very difficult condition and there were huge uncertainties due to the influence of Covid-19. Repeating the statement at the previous meeting, Lowe said that a new recovery would be seen at the end of 2020.
In responding to the increasingly bleak economic conditions, RBA policymakers have prepared various options, including cutting interest rates again if economic conditions continue to deteriorate in the coming months. Lowe admitted that market operations carried out in lending continue to be intensively carried out to boost the economy.
Factors Affecting the AUD Movement
The RBA statement this afternoon also highlighted the condition of the global economy which experienced a significant decline due to the impact of the Covid-19 pandemic. The gloomy condition of the global economy is reflected in the surge in the number of layoffs which directly raises the unemployment rate.
In its projections, the RBA estimates that Australia's unemployment rate could rise to 10 percent, with the jobless rate trend predicted to remain above the 7 percent level by the end of the coming year.
Even so, officials of the Central Bank of Australia see the condition of global financial markets has improved even more compared to some time before. Financial markets are returning to life, especially in Europe and parts of Asia, reflecting a decline in Coronavirus infection rates.
The announcement of the RBA benchmark interest rate this afternoon did not have a significant impact on the movement of the Australian Dollar against the US Dollar, because it had been anticipated by market participants.
In general, nothing is surprising about Philip Lowe's statement that is still struggling with the adverse effects of the Coronavirus. At the time this news was revealed, the AUD / USD pair was trading in the range of 0.6450, up 0.44 percent from the daily Open price.
