Australia’s trade surplus contracts by $295 million in December

The economic data continues to weigh on the Australian economy. Earlier on Thursday, the Australian Bureau of Statistics had announced a worse than expected 0.5% decline in monthly retail sales, much of which was attributed to the bushfires in Australia and the coronavirus outbreak in China. Later in the day, the Bureau further added that December saw a massive decline of $295 million in Australia’s trade surplus that contracted to $5.223 billion last month.

Exports And Imports Gained 1% And 2% Respectively In December

The Australian Bureau of Statistics further revealed that seasonally adjusted gain in exports was recorded at 1% in December that came out at $41.29 billion. On the imports front, the gain was relatively higher. At $36.07 billion, it marked a 2% gain as compared to November’s data.

According to economist Andrew Hanlan of Westpac, however, Thursday’s data came almost in line with the expectations of $5.5 billion worth of surplus in December. He cited the moderating commodity prices in the recent quarter while justifying the expectations of contraction in trade surplus. In the June quarter, he added, commodities especially iron ore had caused a spike attributed to oversupply from Brazil. According to Hanlan:

“The key surprise for the month of December was around exports. Metal ores, gold and fuels all moves in the right direction. However, we were looking for stronger gains – based on partial information and mindful of a potential pre-Lunar New Year bounce.”

Following the economic data, AUD/USD continued its fall in the forex market that started with the earlier report of retail sales. All in all, the currency pair dropped from a daily high of 0.6765 to around 0.6710 where it is currently trading. AUD/USD is likely to meet strong support at around 0.6675 level. On the upside, 0.68 continues to mark a strong resistance for the currency pair in the forex market.

Governor Lowe Sees Coronavirus As A Threat To The Australian Economy

In his recent statement, Governor Lowe of the Reserve Bank of Australia also highlighted that the recent Coronavirus outbreak in China is likely to weigh on the Australian economy more than SARS. China marks a top trading partner for Australia and contributes to its economy in the form of tourism and academia as well. From personal to professional lives coming to a halt in China, the impact on the economy, as per Governor Lowe, will soon start to reflect in Australia as well.