AUD/USD holds overnight gains after positive Australian trade balance report

iNVEZZ.com, Thursday, September 4: AUD/USD held overnights gains, pulling back 0.06 percent to $0.9337 as of 06:40 BST. The pair was trading just above its 100-day Simple Moving Average of $0.9336.

Yesterday the AUD/USD dropped to a two week low of $0.9263 in early trading, however, it managed to recover after the Australian GDP quarterly report released at 02:30 BST yesterday dispelled fears that economic growth had stalled in the second quarter. Aussie bulls were given further encouragement after Reserve Bank of Australia governor Glenn Stevens played down the chances of further interest rate cuts. This helped lift the Aussie to $0.9347.

“The future has no shortage of challenges, but that is hardly new. Sensible policies in many areas are needed to help with the required adjustments. That includes monetary policy, within the limits of its powers. A very accommodative interest rate structure, and a degree of stability and predictability, has been in place for some time now,” Stevens said in his address to the Committee for Economic Development of Australia yesterday.

This morning the currency reached as high as $0.9365 after the release of July’s trade data. According to the monthly trade balance report published at 02:30 BST by the Australian Bureau of Statistics, the trade deficit declined to A$1.36 billion, better than June’s A$1.56 billion and ahead of forecasts for a A$1.77 billion deficit. Seasonally adjusted monthly retail sales, which were released at the same time in a different report, were in line with market expectations, coming in at 0.4 percent. The release said:

“In current prices, the trend estimate for Australian turnover rose 0.1% in July 2014 following a rise of 0.2% in June 2014 and a rise of 0.1% in May 2014. The seasonally adjusted estimate for Australian turnover rose 0.4% in July 2014 following a rise of 0.6% in June 2014 and a fall of 0.3% in May 2014.”
According to Commonwealth Bank of Australia’s (CBA) chief currency strategist Richard Grace, as quoted by The Sydney Morning Herald, the data “shows the support for the Australian dollar is still very good.” CBA expects the pair to reach $0.94 by the end of 2014, which is higher than the market consensus.