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AUD rises as Australia’s trade surplus widens in May.
The Australian Bureau of Statistics released trade account data showing a trade surplus of AUD6.548 billion in May, compared with expectations of AUD5.5 billion.
The US dollar struggled as mixed data on Wednesday fueled expectations of a rate cut by the Federal Reserve.
AUD/USD recovered its recent losses on Thursday. Australia’s trade deficit widened to AUD6.548 billion in May month-on-month, beating expectations of AUD5.5 billion and AUD5.024 billion in April. Australia’s imports fell sharply by 7.2% month-on-month in May, a swing from a 4.2% increase in April. Exports shrank by 2.5%, compared with a 0.6% decline in the previous month.
The Australian dollar could appreciate as Reserve Bank of Australia (RBA) Governor Michele Bullock delivered a hawkish speech on Wednesday. Bullock said the central bank is ready to raise interest rates if the consumer price index (CPI) does not return to the target range of 1%-3%. She also acknowledged that the labor market is easing on multiple measures, NCA NewsWire reported.
The dollar struggled after a mixed bag of U.S. data on Wednesday. The data fueled expectations of a rate cut by the Federal Reserve. The probability of a rate cut of at least 25 basis points by the Fed rose to around 70%, from 47.5% a week ago, according to the CME FedWatch tool.
The depreciation of U.S. Treasury yields put pressure on the dollar. Investors are awaiting key U.S. employment data on Friday, including average hourly earnings and nonfarm payrolls.
