AUD/USD touches three-week highs as Australian trade balance emerges with a surplus

Australian dollar rose to highs unseen in three weeks against its US counterpart on trading Thursday, following a report to show Australia recorded an unexpected surplus on its trade balance in December.

AUD/USD climbed to a daily high at 0.8980 at 0:58 GMT, also the pairs highest point since January 14th, after which consolidation followed at 0.8966, gaining 0.62% for the day. Support was likely to be received at February 5th low, 0.8874, while resistance was to be encountered at January 14th high, 0.9054.

According to data by the Australian Bureau of Statistics released earlier, nations trade balance unexpectedly produced a wider surplus at the amount of 0.468 billion AUD in December, following a revised surplus figure of 0.083 billion AUD in November. Preliminary estimates have been confounded, as they pointed to a deficit of 0.225 billion AUD in December.

Australian exports to China rose to 94.5 billion AUD in 2013, which appears to be the largest figure on record. Companies operating in the mining industry probably drew support from the lower exchange rate of the national currency. AUD/USD lost almost 15% last year.

At the same time, Australian retail sales increased 0.5% in December compared to a month ago in line with expectations. In November sales registered a gain of 0.7%. The series of cuts in borrowing costs by the Reserve Bank of Australia seemed to have favored higher consumer sentiment and respectively, consumer spending in the country. Retail sales account for almost 50 percent of Australias Gross Domestic Product.

“The Aussie is a little better bid” after trade balance data, said Sue Trinh, a senior currency strategist at Royal Bank of Canada in Hong Kong, cited by Bloomberg News. “The Aussie has been in the process of bottoming. We do see the test of 91 cents in the next one to three months.”

Meanwhile, Automatic Data Processing Inc. (ADP) said on Wednesday that private sector in the United States added 175 000 new job positions in January, below expectations of a job gain of 189 000. In December economy managed to add 227 000 jobs. This report usually serves as a guidance for the official employment figures, scheduled to be published on Friday.

The US Department of Labor may report that non-farm payrolls increased by 183 000 in January, after in December employers in the country added 74 000 jobs, or the smallest change since January 2011.

The rate of unemployment in the United States is expected to remain steady at 6.7% in January. The official numbers are to be released at 13:30 GMT tomorrow.

Also yesterday, data by the Institute for Supply Management (ISM) made it clear that corporate structures in US services sector increased their activity in January. The corresponding PMI came in at a reading of 54.0 last month, exceeding experts forecasts of a value of 53.7, after the index stood at 53.0 in December. Values above the key level of 50.0 are indicative for expansion in the sector.

The sub-index of employment added 0.8 points to reach 56.4 in January, marking its highest level in more than three years. The sub-index of new orders rose 0.5 points to reach 50.9. The gauge of output advanced to 56.3 last month from 54.3 in December.

Elsewhere, the Aussie was advancing against the euro, as EUR/AUD cross fell 0.65% to trade at 1.5093 at 7:52 GMT. AUD/NZD was gaining 0.41% on a daily basis to trade at 1.0891 at 7:53 GMT. The pair earlier touched a daily high at 1.0904.