"As the mining investment boom slows you're starting to see a sustained fall in capital-goods imports. That will eventually be offset by a pickup in investment outside mining but it will take some time "
- Shane Oliver, Sydney-based head of investment strategy at AMP Capital
Following RBA's minutes that provided no surprise for markets, Wednesday's report from the Australian Bureau of Statistics showed positive tendency in trade sector. According to the report, the resource-rich economy logged a deficit of 284 million Australian dollars in September, from 815 million a month earlier. Additionally, this level is significantly lower from July's 1.4 billion shortfall. The main reason for such a performance is a 1% decline in imports. Capital-goods imports fell 3%, while imports of consumer goods plunged 3%. Demand for mining equipment was weaker as well, reinforcing a view mining boom is waning.
Despite the fact AUD/USD eased back to 0.946, the Aussie has been appreciating against the U.S. Dollar over the last half-decade. Highly valued domestic currency has been eroding the earnings of Oz exporters. This year, the currency, however, has simmered down a bit, and lost the parity level against the greenback in May. It helped to make exported products more competitive; however, it also negatively impacted imports. Unless China accelerates, Australia may struggle to grow as well. However, recent data points at a rebound in the world's second largest economy, suggesting the demand for Australian goods would improve in the foreseeable future.
© Dukascopy Bank SA