The trade balance reading widened to $3.41 billion in February seasonally adjusted, according to the ABS (Australian Bureau of Statistics), the trade deficit widened by $254m (8%) on the deficit in January.
Exports from January to February fell by $237m (1%) to $25,265m seasonally adjusted. This is how exports panned out:
- Non-monetary gold fell $290m (20%)
- Rural goods fell $200m (5%)
- Net exports of goods under merchanting remained stead at $40m
- Services credits fell $50m (1%)
Imports of Goods and services from January to February fell $251m (1%) to $28,758m, this is how imports panned out, seasonally adjusted:
- Goods and services debits fell $54m to $28,675m
- Intermediate and other merchandise goods fell $269m (3%)
- Consumption goods rose $272m (3%)
- Non-monetary gold rose $23m (7%)
- Capital goods rose $23m
- Services debits fell $102m (2%)
The Australian dollar has fallen to 0.7568 on the back of that news.
We have seen commodity prices have risen since reaching a lows of $27.70 back in January and with iron ore prices rebounding as well, can this be sustained? With the rise of commodity prices this has been offset by the appreciation of the Australian dollar and also a big thanks goes to a dovish Federal Reserve in recent months. This has certainly played the part of a widening trade deficit.
The Reserve Bank of Australia (RBA) is increasingly under pressure to ease monetary policy and they will deliver thier cash rate statement today for April which I feel they will leave rates on hold. The RBA will be concerned with the appreciation of the Australian dollar and with inflation below the RBA target range we may see some jawboning. Maybe, but Governor Glenn Stevens will make mention that outside forces will depreciate the Australia dollar.