AUD/USD has edged higher after posting another record trade surplus for June. The currency pushed above 0.6960, before selling interest emerged. Note highs from Tuesday's session at 0.6967 are close by. The trade surplus printed at A$17.7bn, well above the consensus forecast of A$14bn. Exports once printed stronger than expected (+5%, versus flat expected), while imports were weaker at +1%, versus the +3% consensus forecast.
- Iron ore exports continued to push higher (+5.7% in the month), while coal exports eased back, but remain comfortably above levels from late last year in value terms. Gold exports also surged, but this trend may reverse next month.
- The general expectation is for Australian trade surpluses to moderate as global growth slows and commodity prices come off the boil.
- Still, the starting point for the trade position is a strong one and provides the AUD with some degree of protection to external headwinds, particularly amidst US recession risks.
- This point is reinforced by the chart below, which overlays Australia's trade position with previous US recession periods going back over the past 3 decades.
Fig 1: Australian Trade Position & US Recessions
Source: MNI/Market News/Bloomberg