AUD/USD trades steadily after Australian trade balance data, Fed taper speculation continues

Australian dollar traded steadily against its US peer on Wednesday, after a report showed that Australian trade balance deficit contracted more than projected in September, while upbeat services sector data released yesterday out of the United States provided certain support to the view of a sooner than expected tapering of stimulus by the Federal Reserve.

AUD/USD touched a session high at 0.9526 at 4:45 GMT, after which consolidation followed at 0.9512, gaining 0.04% for the day. Support was likely to be found at November 3rd low, 0.9436, while resistance was to be encountered at October 28th high, 0.9623.

Earlier on Wednesday it became clear that Australia registered a deficit on its trade balance for the 21st consecutive month in September, but however, the deficit figure shrank in comparison with August, as exports increased, while imports fell at a faster pace. Export of non-farming goods increased 1.0% in September, but its performance has been to a certain extent neutralized by lower export of farming goods. Overall exports rose 0.5% in September. Export towards China considerably slowed down in September, rising only 0.1%, after climbing 11.3% in August. At the same time, imports decreased 1.0% in September. The deficit on nations trade balance amounted to 0.284 billion AUD in September, from a revised deficit figure of 0.693 billion AUD a month ago. Experts had anticipated that the deficit will shrink at a lesser pace to reach 0.500 billion AUD in September.

Meanwhile, the US dollar found strong support against peers yesterday, after the Institute for Supply Management (ISM) reported that the non-manufacturing PMI for the United States climbed to a reading of 55.4 in October from 54.4 in September, while preliminary estimates pointed a slow down to 54.0 in October. This result indicated that business entities in the country were looking beyond the political impasse that led to 16 days of partial government shutdown.

US Gross Domestic Product probably expanded at a 2% annualized rate during the third quarter of the year, slowing down in comparison with the 2.5% growth, recorded during the previous three months, according to the median estimate of economists in a survey by Bloomberg. The official GDP report is due to be released tomorrow.

Federal Reserve Bank President for San Francisco, John Williams, said on Tuesday that US economic growth in the recent months has disappointed his expectations, partially eroding his confidence that improvement in the labor market will last without monetary stimulus. “Up until recently, I was thinking we would start seeing more of that self-powered growth in the second half of this year,” Williams told reporters in San Francisco, cited by Bloomberg News. “We’re still a long ways from where we want to be.”

In addition, Richmond Fed President Jeffrey Lacker said also on Tuesday, following a statement in Charlotte, North Carolina, that economy will probably expand only 2% in 2014, with no new source of strength.

Elsewhere, the Aussie was lower against the euro, with EUR/AUD cross gaining 0.08% on a daily basis to trade at 1.4189 at 9:05 GMT. AUD/NZD pair was retreating 0.26% to trade at 1.1341 at 9:07 GMT.