AUD/USD remains bid despite below-forecast Australian trade surplus data
- AUD/USD clocks fresh session highs despite the weaker-than-expected Australian trade surplus.
- Australia's trade surplus narrowed to A$ 7,268 million in July.
- Imports growth picked up a pace in July, a sign of healthy domestic demand.
Australia reported a weaker-than-expected trade surplus for the month of July at 01:30 GMT. So far, however, the AUD has ignored the decline in the trade surplus.
As of writing, the AUD/USD is trading at session highs near 0.6820 - up eight pips from the pre-trade data level of 0.6812.
The Australian trade surplus narrowed to A$ 7,268 million in July from June's surplus of A$ 8,036 million. The investors were expecting a trade surplus of A$ 7,400 million.
The outbound shipments or exports rose 1% in July, matching June's performance. Meanwhile, imports or inbound shipments increased by 3%, following a 4% drop in June.
The drop in exports is hardly surprising, given the weakness in the external sector due to the US-China trade war. Meanwhile, the uptick in imports indicates the domestic demand is holding up well and could help the economy absorb the shock from the slowdown in the external sector.
The uptick in imports could be the reason behind AUD's resilience to the weaker-than-expected trade surplus.
It is worth noting that the trade data has come a day after Australia reported the lowest quarterly GDP reading in 10 years. In seasonally adjusted terms, GDP expanded by 0.5 percent in the second quarter, or 1.4 percent for the year — the worst reading since the September quarter of 2009.
The currency pair may extend gains further during the day ahead as the technical charts have rolled over in favor of the bulls following Wednesday's 0.30% gain.
Technical levels