Key Moments
- AUD/USD traded around 0.6900 during Asian hours on Thursday after Australia’s May Trade Balance swung to a A$3,018M deficit.
- Exports dropped 6.9% MoM in May while imports rose 2.6% MoM, sharply missing expectations for a A$2,200M trade surplus.
- The US Dollar stayed stable after Fed Chair Kevin Warsh avoided clear July policy guidance at the ECB Forum, with his tone viewed as less hawkish.
Australian Dollar Holds Ground After Trade Data Surprise
AUD/USD was marginally higher during Asian trading on Thursday, hovering near 0.6900 after modest losses in the prior session. The pair remained relatively stable as the Australian Dollar was underpinned by the latest domestic Trade Balance report, even though the data showed a sharp deterioration. Market participants are now looking ahead to the release of US Nonfarm Payrolls for June later on Thursday.
Australia’s Trade Balance Swings to Deficit
Data from the Australian Bureau of Statistics (ABS) on Thursday showed that Australia’s Trade Balance moved into a deficit of A$3,018M month-on-month in May. This marked a reversal from April’s surplus of A$1,383M, which had been revised down from A$1,791M. The outcome contrasted with market expectations, which had pointed to a surplus of A$2,200M.
The deterioration in the Trade Balance was driven by a sharp decline in exports and a simultaneous pickup in imports. Exports fell 6.9% month-on-month in May, following a 7.2% increase in the previous month. At the same time, imports rose 2.6% month-on-month after a 0.2% increase in April, which was revised from 0.8%.
| Indicator | Period | Actual | Consensus | Previous | Source |
|---|---|---|---|---|---|
| Trade Balance (MoM) | May | -3,018M | 2,200M | 1,791M | Australian Bureau of Statistics |
Fed Chair Warsh’s Comments Keep Dollar in Check
AUD/USD continued to trade in a narrow band as the US Dollar steadied following Federal Reserve Chair Kevin Warsh’s appearance at the ECB Forum on Central Banking on Wednesday. Warsh did not offer explicit signals on the Fed’s upcoming July policy decision. He acknowledged that inflation is still too high and reaffirmed the central bank’s commitment to its 2% inflation goal and to institutional independence, but his overall stance was seen as less hawkish than many had anticipated.
Warsh also expressed a personal inclination toward reducing the Fed’s bond holdings. However, he stressed that any changes to the balance sheet would come only after extensive public preparation.
Geopolitical Developments Weigh on the Greenback
The US Dollar faced additional pressure as risk sentiment improved on the back of more constructive geopolitical signals from the Middle East. Qatari representatives reported “positive progress” in ongoing talks between US and Iranian officials on a memorandum of understanding, noting that both parties agreed to continue discussions. Adding to the constructive tone, US Vice President JD Vance commented that the negotiations in Doha are proceeding well and indicated that formal talks on the nuclear file are expected to begin in the near future.
About the Australian Trade Balance Indicator
The Trade Balance released by the Australian Bureau of Statistics measures the difference between the value of Australian exports and imports of goods. Export figures provide insight into overall Australian economic growth, while import data shed light on domestic demand conditions. The Trade Balance serves as an early signal of net export performance. If demand for Australian exports remains firm, it tends to support an improvement in the Trade Balance, which is generally viewed as favorable for the Australian Dollar.
Last release: Thu Jul 02, 2026 01:30
Frequency: Monthly
Actual: -3,018M
Consensus: 2,200M
Previous: 1,791M
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