Dollar gains timid despite trade data
The local unit was only modestly higher in late afternoon, despite Australia’s surprise trade surplus.
Despite stellar November trade data, the Australian dollar only managed minor gains by Friday afternoon, as it ran into a rising US dollar.
The Aussie dollar was worth US73.22 cents at 5pm (AEDT), up from US73.09c on Thursday.
Australia posted its first monthly trade surplus since early 2014 in November, as rising global commodity prices helped power exports, pointing to a possible quick rebound in the economy after its third-quarter contraction.
Fuelling the improved trade performance was a surge in coal and iron-ore prices last year that has helped global commodity exporters.
The seasonally adjusted surplus of $1.24 billion in November surprised economists who had forecast a deficit of $550 million.
The figures released by the Australian Bureau of Statistics on Friday showed an 8 per cent surge in exports from the previous month, compared with a deficit of $1.12bn in October.
The data has provided greater hope that the resource-rich economy will avoid another GDP contraction in the fourth quarter, and sidestep a recession.
Still, a sustained improvement in the trade numbers is needed in December to make sure net exports adds to growth, instead on subtracting, economists said.
A repeat in December to increases in November trade volumes should see trade aid fourth quarter’s GDP growth
“This should eliminate fears out there that Australia was at risk of recording a technical recession,” said NAB economist Tapas Strickland.
The trade data emerged in the face of broad US dollar strength, which remains the dominant force in global markets, traders said.
Still, the Aussie was one of the best performing currencies in Asia, holding its ground, while most others retreated.
Geopolitical concerns are also a factor acting against more buying of the Aussie, which is now around its best levels for three weeks.
“A stronger US dollar and a clear sense we are just one tweet away from a China-US trade spat” are keeping buyers sidelined, said Robert Rennie, global head of strategy at Westpac.
Dow Jones, with AAP
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