WSJ:Australian Dollar Sharply Lower Late After Trade Deficit
Rates At 0630 GMT
Latest Change
AUD/USD 1.0284 -1.09%
AUD/JPY 84.92 -0.34%
6.25% Apr, 2015 4.1375% -0.06
5.50% Mar, 2023 4.1611% -0.04
10-Yr Spread To U.S. +182 bps -3 bps
SFE June 3-Year Futures 96.59 +0.01
SFE June 10-Year Futures 95.975 -0.02
SYDNEY (Dow Jones)--The Australian dollar was lower late Wednesday after the country's second trade deficit in a row fueled fears the economy is slowing sharply.
Australia, which is counting on an outsized export performance to fan its growth, recorded a trade deficit of 480 million Australian dollars (US$493.2 million) in February, the Australian Bureau of Statistics said earlier Wednesday.
"It was a bit of a shocker really," said Westpac senior currency strategist Sean Callow. "We were surprised by the breadth of the export weakness," he added.
The Australian dollar fell sharply after the trade data, extending a week-long slide which puts it now at its lowest levels since mid-January. At 0630 GMT, the Australian dollar was trading at US$1.0284, down from an earlier intraday high of US$1.0332 and US$1.0397 late Tuesday. It was trading at Y84.92, down from Y85.21.
Callow put support for the local unit at US$1.0210 and resistance around US$1.0339.
The Aussie was already fragile after the Reserve Bank of Australia signaled Tuesday it was close to cutting interest rates again.
National Australia Bank chief economist Robert Henderson said the only thing now standing in the way of a rate cut at next month's meeting on May 1 would be a surprise underlying inflation number of 0.8% or higher for the first three months of 2012. That data is due April 24.
Analysts say declining exports of Australia's two biggest commodities: iron ore and coal, also will be a substantial drag on growth in the March quarter.
Weakness in exports to China--Australia's biggest trading partner--and Asia more generally over the past couple of months is a "prima facie cause for concern", Henderson said. Imports also slipped across the board in February, evidence of continuing soft domestic demand.
-By Rachel Pannett, Dow Jones Newswires; 61-2-8272-4684; rachel.pannett@dowjones.com
