Dollar sags on weak trade figures
The Australian dollar dropped to a three-month low following the release of weaker than expected trade data.
At 1700 AEST on Wednesday, the Australian dollar was trading at 102.82 US cents, down from 103.93 cents on Tuesday.
National Australia Bank head of research Peter Jolly said the release of economic data showing the second consecutive monthly trade deficit pushed the currency lower on Wednesday.
‘‘We had been holding above that 103 US cent level but it came off after that trade data, which caused a bit of a shockwave,’’ he said.
Data released by the Australian Bureau of Statistics on Wednesday showed the trade deficit narrowed to $480 million in February, from $971 million in January.
However, the result was much weaker than the $1.1 billion surplus economists had forecast.
Mr Jolly said the Australian dollar had been falling since the Reserve Bank of Australia indicated on Tuesday it may cut the official interest rate as early as next month.
But he said the trade data hastened the decline.
‘‘That is not a good combination for a currency: a central bank that is considering easing and weak trade data,’’ he said.
‘‘So it’s not surprising it has come off.’’
Mr Jolly said traders would now be focusing their attention on the release of US non-farm payroll data on Friday.
If the data showed continued strong employment growth, it could strengthen the US dollar at the expense of its Australian counterpart, he said.