The Australian Dollar is gathering strength versus the US Dollar in risk on trading on Thursday. A stronger than expected Chinese trade surplus and broadly in line US initial jobless claims is keeping the risk sensitive Australian Dollar US Dollar exchange rate buoyant.
At 15:15 UTC, AUD/USD is trading +0.7% at US$0.6443, towards the upper end of the daily traded range of US$0.6379 – US$0.6473. The pair is on track to rise 0.4% across the week, its fifth straight week of gains.
Chinese Exports +3.5% in April
The Australian dollar is trending higher helped by an unexpectedly upbeat Chinese trade balance. The Chinese trade surplus in April widened to $45.34 billion on an annual basis, significantly beating analysts forecasts of $6.35 billion. Exports last month increased 3.5% yoy confounding analysts who had expected a -15.7% decline.
The recovery in exports comes as factories reopened after lockdown and rushed to fill a backlog of orders. Stronger demand from south-east Asia, one of China’s biggest trading partners has also been driving the rebound as markets gradually reopen. In another positive sign, commodity imports are gaining pace. Iron ore and copper imports increased 22% and 14% respectively in April on an annual basis as infrastructure construction resumed.
Australia’s principal trading partner is China. For this reason, the Australian Dollar is considered a proxy for China. Positive data from China often boosts the Australian Dollar.
US Jobless Claims Top 3 Million
The US Dollar pushed higher versus most its peers, although it lost ground against the Aussie, after data showed that US jobless claims topped 3 million for a 7th straight week. The total number of Americans who have filed for unemployment benefits since the coronavirus crisis began mid-March is 33.5 million, which is around 20% of the US labour force.
Jobless claims remain elevated despite several states reopening their economies, although claims are decelerating, suggesting that the worst has passed.
Attention will now turn to tomorrow’s US Labour department’s non-farm payroll report which is expected to highlight the depth of job losses. Analysts are forecasting a 21.3 million drop in jobs and unemployment to hit 16%.
