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AUD/USD declines amid shrinking Australian trade surplus, inflation slowdown

  • The Australian Dollar weakens after softer Australian macroeconomic data for November.
  • Australia’s trade surplus contracts sharply due to a notable decline in exports.
  • Investors await US employment data for fresh clues on the US monetary policy outlook.

AUD/USD extends its pullback and trades around 0.6690 on Thursday at the time of writing, down 0.40% on the day, after posting a more-than-one-year high on the previous day. The pair corrects as the Australian Dollar (AUD) comes under renewed pressure following disappointing economic data released in Australia.

The weakness in the Aussie is primarily driven by the narrowing of the trade surplus. Data from the Australian Bureau of Statistics (ABS) show that the trade surplus shrank to 2.936 billion Australian dollars in November, from more than 4 billion in the previous month. This deterioration mainly reflects a 2.9% monthly decline in exports, following an increase in October, while imports edged slightly higher. These figures raise concerns about the contribution of external trade to Australia’s economic growth toward the end of the year.

Inflation data published earlier this week also weighed on the currency. The Consumer Price Index (CPI) rose 3.4% YoY in November, below market expectations and easing from the previous month. Although inflation remains above the Reserve Bank of Australia’s (RBA) target range, the slowdown adds to uncertainty surrounding the monetary policy outlook. RBA Deputy Governor Andrew Hauser said the figures were largely in line with expectations and reiterated that interest rate cuts are unlikely in the near term, while stressing that the central bank remains data-dependent.

On the US side, the US Dollar (USD) finds some support from relatively firm economic indicators. Recent data on employment and services activity reinforce the view of a resilient US economy, limiting expectations of an imminent shift toward easier monetary policy by the Federal Reserve (Fed). Against this backdrop, investors remain cautious ahead of the US Nonfarm Payrolls (NFP) report, which is due on Friday, and widely seen as a key catalyst for near-term interest rate expectations.

The contrasting fundamentals between Australia and the United States (US), therefore, keep downside pressure on AUD/USD, with the pair remaining sensitive to any macroeconomic surprises that could influence the outlook for the Reserve Bank of Australia and the Federal Reserve.

Australian Dollar Price Today

The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the New Zealand Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD0.25%0.20%0.03%0.12%0.40%0.43%0.23%
EUR-0.25%-0.05%-0.22%-0.13%0.14%0.18%-0.02%
GBP-0.20%0.05%-0.17%-0.08%0.19%0.23%0.03%
JPY-0.03%0.22%0.17%0.07%0.36%0.36%0.18%
CAD-0.12%0.13%0.08%-0.07%0.28%0.30%0.11%
AUD-0.40%-0.14%-0.19%-0.36%-0.28%0.04%-0.17%
NZD-0.43%-0.18%-0.23%-0.36%-0.30%-0.04%-0.20%
CHF-0.23%0.02%-0.03%-0.18%-0.11%0.17%0.20%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).

Author

Ghiles Guezout

Ghiles Guezout is a Market Analyst with a strong background in stock market investments, trading, and cryptocurrencies. He combines fundamental and technical analysis skills to identify market opportunities.

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