- The Australian Dollar remains stable following the release of key economic data.
- Australia’s trade surplus rose to 5,620M in January, surpassing the 5,500M forecast and improving from 4,924M previously.
- The US Dollar stays weak as risk sentiment improves after President Trump’s tariff policy shift.
The Australian Dollar (AUD) remains firm for the fourth consecutive day on Thursday, with AUD/USD gaining ground as the US Dollar (USD) stays subdued amid improved risk sentiment following another shift in President Donald Trump’s tariff strategy.
On Wednesday, the White House announced a temporary one-month exemption for automakers from newly imposed import tariffs on Mexico and Canada. Additionally, reports indicate that Trump is considering excluding certain agricultural products from tariffs on Canada and Mexico, as per a Bloomberg journalist on X.
Australia’s trade surplus climbed to 5,620 million in January, surpassing the 5,500 million forecast and improving from the previously revised 4,924 million. This was fueled by a 1.3% month-over-month increase in exports, reaching an 11-month high, driven by non-monetary gold, while imports declined by 0.3% MoM after a sharp 5.9% rise in December, according to the Australian Bureau of Statistics.
In addition, building permits in Australia surged by 6.3% MoM in January, marking the fastest pace since July and following an upwardly revised 1.7% growth in December. This signals ongoing strength in the housing sector.
However, geopolitical tensions remain a concern. A spokesperson for the Chinese foreign ministry stated that China is prepared to fight "any type" of war in response to Trump’s escalating trade tariffs, as reported by BBC. Given China’s role as Australia’s largest trade partner, heightened tensions could weigh on the Australian Dollar in the near term.
Australian Dollar Gains as US Dollar Weakens Amid Economic Concerns
The Australian Dollar (AUD) appreciates against the US Dollar (USD) on Thursday as concerns over slowing US economic momentum weigh on the Greenback. The US Dollar Index (DXY) hovers around 104.30, struggling to gain traction ahead of key economic data releases.
US Economic Data & Market Sentiment
- The US ADP Employment Change report for February showed just 77K new jobs, significantly below the 140K forecast and January’s 186K figure. Traders now focus on Friday’s US Nonfarm Payrolls (NFP) report, which is expected to show a rebound to 160K jobs from January’s 143K.
- President Donald Trump announced that he is working with House Republicans on a continuing resolution to fund the government through September, per Reuters.
- The Federal Reserve’s (Fed) Beige Book highlights concerns about the economic impact of Trump’s trade policies, with early signs of strain appearing even before full implementation.
- The US ISM Manufacturing PMI fell to 50.3, slightly below the 50.5 forecast and down from January’s 50.9. However, S&P Global’s final Manufacturing PMI for February exceeded expectations at 52.7, improving from its preliminary estimate.
- Australia’s Q4 2024 Gross Domestic Product (GDP) expanded by 0.6% quarter-over-quarter, surpassing the 0.3% growth in Q3 and exceeding market expectations of 0.5%. On an annual basis, GDP grew by 1.3% in Q4, up from 0.8% in Q3.
- The Judo Bank Composite PMI fell to 50.6 in February from 51.1 in January, marking the fifth consecutive month of growth, albeit at a slower pace. Similarly, the Services PMI eased to 50.8 from 51.2, reflecting continued expansion for the thirteenth straight month.
- Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser warned that global trade uncertainty is at a 50-year high, with potential impacts on investment and economic growth due to Trump’s tariffs.
- China’s financial regulators cleared a record 3.8 trillion yuan ($530 billion) in bad assets in 2024, signaling continued efforts to stabilize the economy and rebuild confidence in the property sector.
- China’s Services PMI unexpectedly rose to 51.4 in February, up from 51.0 in January, exceeding expectations of 50.8.
- Chinese authorities set a 5% economic growth target for 2025, with a 2% CPI goal and plans for a proactive fiscal policy while ensuring stability in real estate and stock markets.
AUD/USD Technical Outlook
AUD/USD trades near 0.6330, forming an ascending channel pattern on the daily chart, indicating a bullish trend.
Resistance Levels:
- First resistance: 0.6380 (upper boundary of the ascending channel).
- Key resistance: 0.6408 (three-month high recorded on February 21).
Support Levels:
- Immediate support: 50-day Exponential Moving Average (EMA) at 0.6310.
- Nine-day EMA: 0.6296.
- Key support: Lower boundary of the ascending channel at 0.6270. A break below this level could push AUD/USD towards the four-week low of 0.6187, recorded on March 5.
The Australian Dollar’s strength is supported by robust domestic data and positive risk sentiment, while US economic concerns and Federal Reserve policy uncertainty continue to weigh on the US Dollar.
