It has been a good news week for the economy and things continued with better expected trade balance news. With COVID-19 relatively contained, things look good. As such it was a good day against GBP with the Australian dollar trading up to 0.55.
Australia’s economy continues to show promise, with the release of better than expected Trade Balance figures for October. According to data released by the ABS, October saw a much wider surplus than expected.
Australia Oct balance goods/services reached +AUD$7,456m, seasonally adjusted against a Reuters poll predicting +AUD$5,800 million. Exports were up 5% month on month, another sign that the recovery is well under way against a prediction of 4%.
The balance may have been helped by much lower than expected imports which only rose 1% against a drop of 6% previously. However, expectations had been for a 4% rise.
This data suggests domestic demand may not be as strong as previously thought, while ongoing tensions at ports continue to weigh on figures.
Ahead of the announcement the AUDUSD pair rose from 0.7370 to 0.7401 and was sitting at 0.7406. However, despite the good news, the Australian dollar remained fairly stable against its American counterpart. Some analysts now expected a correction for the dollar after reaching 2.5 year lows during the week.
While this has been a week of good news on the economy in Australia, the opposite has been true in the US with growing calls for a stimulus and worsening sentiment. Even so, despite the growing optimism, Australia’s central bank continues to be open to the prospect of further economic intervention.
Against sterling, AUD ticked up to 0.55 as the British continued to fret over a trade deal with Europe. Their ongoing Brexit woes outweighed the news that the UK has become the first country to approve a COVID-19 vaccine. However, lingering hopes of a deal when European leaders meet later in the month plus the feeling that the UK is well placed on the vaccine front could point to a correction further down the line.
Over the course of the day the dollar rose against EUR. It opened at 0.61066 and hit a high of 0.61269 early in trading before falling to a low of 0.60924 and closing on 0.61266.
Overall, the impression continues that Australia is better positioned than most as it emerges towards a post COVID world. The mood for 2021 is relatively bullish although there are signs of pull back.
The ongoing spat with China continues to weigh on sentiment. The exact extent of the eventual economic damage remains unclear. Things didn’t go much better after Australia’s Prime Minister Scott Morrison sent a WeChat message to his counterpart in China over a doctored image of an Australian soldier.
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