FX.co ★ Aussie Dollar Dips on Lackluster Trade Data

On Thursday, the Australian dollar declined to approximately $0.657, interrupting a three-day upward trend due to disappointing trade data. Australia's trade surplus in May dramatically reduced to AUD 2.24 billion, far below predictions of AUD 5.09 billion and a revised figure of AUD 4.86 billion for April. This was the smallest surplus in almost five years, attributed to exports falling to a three-month low, largely because of diminished US shipments impacted by tariffs. Further compounding the situation, China's services PMI, a crucial indicator since China is Australia's largest trading partner, dropped to a nine-month low, falling short of expectations. This occurred amid escalating trade tensions led by the US, with ambiguity regarding the new US-Vietnam trade agreement and increased apprehensions that China could be excluded from essential supply chains. However, a weaker US dollar, spurred by heightened speculation of Federal Reserve rate cuts, moderated the losses for the Australian currency, keeping it close to eight-month highs. Investors are now poised for next week's Reserve Bank of Australia (RBA) decision, with the market overwhelmingly anticipating a rate cut due to sluggish growth and diminishing inflation threats.