- Australian Dollar under pressure after trade surplus declines AUD3.5 billion
- Australian retail sales expected +3.3% mom
- US Dollar holds gains after better than forecast initial jobless claims
- US NFP in focus
The Australian Dollar US Dollar (AUD/USD) exchange rate is falling for a third consecutive day. The pair settled -0.4% on Tuesday at US$0.7338. At 13:30 UTC, AUD/USD trades -0.5% testing US$0.7300.
The Australian Dollar came under pressure in early trade and has remained depressed across the session. Australia’s trade surplus shrank to AUD4.6 billion in July, a AUD3.5 billion plunge. Exports fell 4% whilst imports rose 7%. However, political tensions with China is starting to take its toll.
The escalating political dispute with China, Australia’s largest trading partner has seen tariffs and duties imposed on wine, grains and beef exports. These are starting to show. Grain exports fell -40% and meat exports were down 10%.
Attention will now turn to Australian retail sales due for release on Friday morning local time. Analysts are expecting a +3.3% month on month increase to be confirmed.
The US Dollar is advancing following upbeat US data. The number of Americans filing for unemployment benefits for the first time dropped to the lowest level since the start of lockdown. 881,000 initial jobless claims were recorded last week. This was better than the 950,000 than analysts had expected. Claims had remained stubbornly above the 1 million mark over the past few months, only falling below that threshold on one other occasion.
Continuing claims also dropped to 13.3 million down from 14.5 million, beating analysts’ forecasts of 14 million. Of the millions of Americans that were laid off over lockdown, only a fraction have recovered their jobs. The resurgence of coronavirus across the southern states in the summer months has hindered the recovery in the labour market and the broader economy.
Attention will now turn to tomorrow’s non-farm payroll report, which is expected to show that 1.4 million jobs were created in August. The unemployment rate is expected to tick down to 9.8%
