Australia Unexpectedly Reports Trade Deficit 2012.04.05

April 05, 2012 01:41

Australia’s trade balance dropped a seasonally adjusted $491 million in February 2012 to a $480 million deficit from a $971 million in January, according to the Australian Bureau of Statistics on Wednesday. This was the second straight month the country posted a deficitand resulted lower than economists’ projections of a $1,100 million surplus. January marked the first deficit post in 11 months. The country’s exports lowered 2.0% from a seasonally adjusted $24,943 million in January to $24,425 million in February. Imports dropped a seasonally adjusted 4.0% to $24,905 million in February from the preceding month’s $24,914 million. Within imports of goods and services, consumption goods decreased $395 million, intermediate and other merchandise goods reduced $307 million, and capital goods went down $257 million. Yet, non-monetary gold increased $10 million.

 

In other news, the United Kingdom services PMI (purchasingmangers index) increased in March 2012 from February, according to Markit on Wednesday.The region’s service sector reported their business activity improved, resulting in a 55.3 March figure from February at 53.8. Additionally, over the first quarter in 2012 the index averaged at its highest level since the second quarter of 2010. Companies reported the volume of new business increased alongside an ability to build additional work from existing contracts.Companies reported little change in their volumes of work outstanding. Yet, companies modestly increased employment as expectations for future activity remain positive. Business cost pressures remained the same in March from February’s 12-month high.

The AUDUSD dropped below 1.0340 and is expected to head lower. The Aussie has lost strength in recent days due to negative economic reports and a dovish RBA. The U.S. Dollar has gained steadily due to an economic recovery in the U.S. and a Fed reluctant to offer more stimulus. We expect the AUDUSD to target 1.0100. 

 

Eugene Ross, Analyst

Admiral Markets

 

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