Australia trade deficit widens in May

Australia's trade deficit widened significantly more than expected in May, pushing the Australian Dollar down immediately after the release of the official data. The currency rose to 95.06 U.S. cents, reaching the highest level since November amid the RBA's decision to keep interest rates unchanged. However, after the trade balance data disappointed markets, the Aussie lost 0.4% to 94.64 versus the greenback. Australia posted a seasonally adjusted trade deficit of A$1.91 million in May, up from a revised deficit of A$780 million in April, according to the Australian Bureau of Statistics. The figure surprised analysts to the downside, as they bet for a A$100 million deficit. Exports of goods and services declined 5% to A$26.681 billion in May, while imports fell 1% to A$28.592 billion. In the previous month, economists noted that falling prices for iron ore and coal appeared to be the main factor behind the trade surplus swinging to a deficit. 

Meanwhile both Treasure and the Reserve Bank of Australia are cautious about how the Australian economy will perform in the coming year, as the year ahead will bring a sharp decline in business investment as spending in the mining sector starts to fall from its high of around 8% towards 2-3%. It is expected that the nation's economy will grow 2.% next year, while the unemployment rate is expected to average 6.25%.