AUD/USD fell from two-week highs after Australian trade balance data

Australian dollar came off over two-week highs against its US peer on Thursday, following the downbeat trade balance report out of Australia and ahead of ADP Research Institute report on employment in the United States.

AUD/USD fell from the current session high at 0.9187, recorded at 1:50 GMT, which was pairs highest level since August 19th, to trade at 0.9154 at 6:19 GMT, losing 0.22% for the day. Support was likely to be received at September 3rd low, 0.8972, while resistance was to be encountered at August 19th high, 0.9233.

The Australian Bureau of Statistics reported earlier on Thursday that Australia registered a significant trade deficit on its trade balance at the amount of 0.765 billion AUD in July, following the 0.243-billion-AUD surplus in June, as the latter was a revision down from a surplus of 0.602 billion AUD previously. Analysts had projected that Australia will reach a surplus of 0.110 billion AUD in July. This was the most considerable deficit since January and the third deficit registered since the beginning of 2013, favored by increased import and almost unchanged export. During the first seven months of 2013 Australia has registered a deficit on its trade balance at the amount of 0.182 billion AUD. Australian economy has slowed down during the past year, following the drop in prices of goods and the lower investment costs in the mining sector. Reserve Bank of Australia (RBA) has initiated a reduction in its benchmark rate 8 times since late 2011 in order to spur activity in other sectors of the economy, except mining. However, the effects of such measures have been limited.

Additionally, yesterday it became clear that Australian Gross Domestic Product rose by 0.6% during the second quarter of 2013 compared to the first quarter, when it increased by the revised down 0.5%. Preliminary estimates were confirmed. On annual basis, Australian GDP rose by 2.6% in Q2, surpassing the projected 2.5% gain.

Meanwhile, markets awaited the ADP Institute report on US employment later in the day. It will probably state that US employers added 182 000 job positions during August, following the 200 000 increase in number of jobs in July, according to the median estimate by experts, surveyed by Bloomberg. Such scenario may reinforce the case of a possible stimulus scale back by Fed.

“Better data in the U.S. suggests more positive signs for the global economy, so while the Aussie is not going to race away against the U.S. dollar, it should outperform on the cross rates,” said Peter Dragicevich, a currency economist in Sydney at Commonwealth Bank of Australia, cited by Bloomberg. The ECB and BoE “will reinforce their forward guidance so that will see the euro and sterling underperform, but the current sentiment in the market should see the Aussie and kiwi outperform.”

Another survey showed that 65% of the respondents expected that the Federal Reserve Bank will begin tapering its 85-billion-USD-per-month asset-purchasing program at its meeting in September.

Also, on Wednesday an official report said that US trade deficit widened more than projected to 39 147 billion USD (13.3% increase) in July, following the deficit figure of 34 543 billion USD in June.

Elsewhere, the Aussie was steady against the euro, with EUR/AUD cross dipping a mere 0.01% to trade at 1.4400 at 6:44 GMT. AUD/NZD pair, on the other hand, was gaining 0.13% to trade at 1.1622 at 6:45 GMT.