The newest Australian trade balance noted a hard drop in exports. With the week's quite crowded by fundamental releases from Australia, including RBA interest rate decision, what could it means for AUD?

The newest Australian trade balance noted a hard drop in exports. March exports recorded a two percent fall from previous month, and trade balance came at 731million USD, instead of the expected and previous balance at 1,200million AUD. With the week's quite crowded by fundamental releases from Australia, including RBA interest rate decision, what could it means for AUD?

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Beware Of External Pressures On AUD

It is important to note that Australia's domestic economy is quite robust. However, risks come from external sectors like exports, as side effects of world's economy hit them hard. For the Aussie itself, the risk represented in shape of Australian trade balance, Chinese data releases, and commodities prices.

Wednesday's Australian retail sales is expected to up 0.4% (mtm) compared to the previous 0.2%. If it comes out true or even higher than that, AUD might go bullish; but Chinese HSBC Services PMI expectation is low, and that might restrain AUD upward movements. It is expected to drop to 50.9 from previous 51.9. The expectation followed the minuscule Chinese HSBC Manufacturing PMI for April that was revised down to 48.1 from 48.3 in flash estimates. Further bullish view come from expectations for Thursday's Australian employment reports that is pretty dismal as no significant improvement is predicted to happen. On the contrary, if any unexpected improvements occur or the market received new perspectives, volatility might rise and push AUD higher beyond last week's resistance.


RBA Is Not Expected To Intervene AUD

Another factor that might come into play is today's RBA interest rate decision and Friday's monetary policy statement. However, inflation rate in the first quarter of 2014 in last month's report has increased considerably, from 2.7% to 2.9%. Therefore, it is possible that RBA will hold benchmark interest rate on 2.5% and maintain their neutral stance. From this side of the stage, at least, no significant pressures expected either upward or downward.

In short, watch out for Australia and China fundamental releases this week. AUD has been in a losing streak for several days, but the condition could change any time now. Expected pressures could bring it down, although unexpected surprise might push it up.