Australia’s Trade Surplus reached A$1,929M in June, significantly surpassing expectations, propelled by a 9.6% increase in exports. An Iran-Oman shipping agreement in the Strait of Hormuz has diminished the demand for the US Dollar as a safe haven. US private payrolls increased by a mere 44K in July, falling short of expectations and exerting pressure on the Greenback. AUD/USD stabilises following two consecutive days of increases, currently trading near 0.7060 during the Asian trading session on Thursday. The pair exhibits minimal movement as the Australian Dollar remains subdued following the release of domestic Trade Balance data. The Australian Bureau of Statistics reported a notable turnaround in the country’s Trade Balance for June, which shifted to a surplus of A$1,929 million month-over-month. This follows a revised deficit of A$2,367 million in the previous reading (initially reported as A$3,018 million) and significantly outperformed market expectations, which had anticipated a deficit of A$1,100 million. The positive shift was propelled by a notable 9.6% month-over-month increase in exports, recovering from a revised 7.6% decline in May, whereas imports experienced a slight decrease of 0.2% month-over-month, reversing the 0.9% increase observed in the previous month.
The AUD/USD pair could experience additional appreciation as the US Dollar encounters challenges stemming from a decrease in safe-haven demand. Sentiment shifted following reports that Iran and Oman have reached an agreement on a shipping route through the Strait of Hormuz, thereby enhancing expectations for increased energy flows from the Middle East. The joint Iran-Oman statement is presently undergoing its final drafting phase. Simultaneously, the anticipated route is projected to function for a duration of two to four months; Tehran has underscored that the agreement does not signify a full restoration of the vital waterway. Meanwhile, economic indicators from the US presented a varied landscape. ADP data released on Wednesday indicated that US private-sector employment increased by only 44K jobs in July, a decline from the 98K recorded in June and falling short of the market consensus of 70K. In the services sector, the ISM Services PMI experienced a modest increase to 54.1 in July, up from 54.0 in June, although it did not meet the anticipated figure of 54.5. Investors are currently anticipating the forthcoming US Initial Jobless Claims report, set to be released later on Thursday.
Strategists at Scotiabank observe that recent US employment data continue to point to a “labour market [that] is tight but not necessarily adding to inflation pressure at the moment”—a combination they describe as “a mild negative for the USD perhaps.” In their view, the absence of clear wage-driven inflation signals tempers support for the Dollar, reinforcing the softer bias that has emerged following the latest FOMC-driven selloff. Strategists also observe that the “USD is steady to slightly softer overall in quiet trade as markets consider a range of impulses for FX,” with investors balancing geopolitical concerns, commodity moves and upcoming US data releases in a cautious manner. In the daily chart, AUD/USD maintains a constructive bullish tone as the spot remains above both the nine-period and 50-period Exponential Moving Averages. The short-term EMA positioned above the longer one and below the price indicates a supportive trend structure.
Meanwhile, the 14-day Relative Strength Index hovering around 60 implies robust but not yet overbought momentum, providing potential for additional gains toward 0.7277, the peak since June 2022, noted on May 6, as long as the pair maintains its current position above the moving averages. On the downside, immediate support is identified at the nine-period EMA near 0.7023, followed by the 50-period EMA at 0.7010. Further demand is concentrated around the horizontal levels at 0.6833 and 0.6400. On the topside, initial resistance is observed at the 0.7278 horizontal barrier. A daily close above this level would strengthen the bullish sentiment and pave the way for a more significant extension of the current upward movement.