The Australian dollar rallied against all other most-traded currencies today after positive trade data released in China, Australia’s biggest trading partner, and Australia itself. Reports about the services sector were rather bad in both Australia and China but that did not prevent the Aussie from logging substantial gains.
The Australian Industry Group Australian Performance of Services Index sank from 38.7 in March to 27.1 in April, seasonally adjusted. That was both the biggest monthly slump and the lowest level of the indicator in the history of the survey. Obviously, the coronavirus pandemic was responsible for the historically bad result as the report explained:
Activity restrictions in response to the COVID-19 pandemic have decimated large segments of Australia’s services industries. The Australian PSIÂ® indicated contraction in all sectors in April (trend). This was the first full month of restrictions on commercial activity including closures or limited trading for many businesses in hospitality, retail, transport, recreation, personal services, education and even community services.
The Australian Bureau of Statistics reported that the trade balance surplus widened from A$3.87 billion in February (revised negatively from A$4.36 billion) to A$10.6 billion in March on a seasonally adjusted basis. The market consensus was predicting a noticeably smaller surplus of A$6.4 billion.
As for economic reports in China, the seasonally adjusted Caixin China Services PMI edged up to 44.4 in April from 43.0 in March but failed to meet market expectations of 50.1. A reading below 50.0 indicates a contraction of the industry, while a reading above 50.0 indicates expansion.
China’s trade balance surplus widened to $45.3 billion in April from $19.9 billion in March instead of narrowing to $9.7 billion as analysts had predicted. A major surprise to specialists was the increase of exports by 3.5% compared with the same month of the previous year, whereas experts were counting on a slump of 12.1%. Meanwhile, imports plunged by 14.2% versus the expected drop of 12.4%.
AUD/USD rallied from 0.6394 to 0.6464 as of 10:41 GMT today. EUR/AUD dropped from 1.6851 to 1.6685. AUD/JPY climbed from 67.94 to 68.87.
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