The Australian June trade balance is coming soon on the economic calendar for 3 August 2017

  • expected is +AUD1800m, prior was +AUD2471m

I posted a preview from NBA yesterday, but to save you a click:

  • expected to reveal a somewhat leaner surplus of $1500m, down from the $2471m surplus
  • A 5.2% fall in the RBA Commodity Price Index in June (an index fashioned on estimates of prices received) is likely to have weighed on export receipts, while port loadings data and industry reports point to a crimping of iron ore volumes.
  • There is however a wild card to consider as far as recorded imports is concerned. We wrote a month ago of the import of the Ichthys LNG project $2.7bn Central Processing Facility that could have shown up in May imports (or possibly June). Moreover, the massive Prelude floating LNG platform left Korea in late June, since arriving offshore to the north east of Broome, and is of much value. Any "sticker shock" from a surprise large deficit, might see some initial market reaction, only to be reversed on closer inspection.
  • Such imports would also bolster measured business investment for the June quarter with no impact on GDP until production and export of LNG commences.

As NAB note, they mentioned that 'wild card' last month. it didn't come in the May figures but could today.

OK, more previews:

Westpac:

  • Australia's trade balance was comfortably in surplus in May, after being impacted by Cyclone Debbie in April.
  • For June, we expect a $1.4bn surplus, narrowing from a $2.5bn surplus in May. Export earnings are forecast to decline by 4%, -$1.3bn. Metal ores, coal and fuels, together accounting for close to 50% of exports, are expected to weaken, down $1.4bn.
  • Prices fell (iron ore and fuels), so too volumes (iron ore, coal and LNG). Imports are forecast to decline by 0.7%, $0.2bn, on lower prices, with oil down and the Australian dollar stronger.

ANZ:

  • We expect the trade surplus to narrow to AUD1.2bn in June from AUD2.5bn in May.
  • Ports data suggest resource exports should slow in June.
  • Meanwhile, we expect some pickup in import growth, largely driven by the stronger AUD.

CBA:

  • The trade balance is firmly is now firmly in the black largely due to the strong lift in commodity prices over the second half of 2016 and into 2017.
  • We expect the trade balance to decline by about $0.5 billion in June.
  • Export values should fall a little due to lower commodity prices in the month.

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If NAB is correct on their wild card call there could be a knee jerk sell of the AUD - I'd expect this to be reversed once the penny dropped though (i.e. a one-off investment import that'll boost exports to come).

A beat, on the other hand, will continue to be AUD supportive - though so much is being driven by offshore development (hello US political turmoil). Also, retail sales data for June (and Q2 ex-inflation) will be important and that comes out on Friday (local time here, 0130GMT 4 August 2017) .... and, of course, the Reserve Bank of Australia SoMp due at the same time as the retail sales data.