Australian Dollar slips despite February Trade Surplus more than doubles

AUD/USD depreciates after two days of gains, trading around 0.6900 during the Asian hours on Thursday. The pair weakens as the Australian Dollar (AUD) comes under pressure despite robust trade data, with Australia’s Trade Surplus more than doubling in February to its highest level in seven months, supported by strong gains in gold and agricultural exports, while imports of gold and data processing equipment declined.

Australia’s Trade Surplus expanded to AUD 5,686 million in February from a downwardly revised AUD 2,258 million in the previous month, significantly exceeding market expectations of an AUD 2,500 million surplus and marking the largest surplus since July 2025.

Exports increased 4.9% month-over-month (MoM) to a four-month high, rebounding from a revised 1.6% decline in the prior month. Meanwhile, imports fell 3.2% MoM to a seven-month low, reversing a revised 1.1% increase in January, reflecting softer domestic demand and ongoing uncertainty in global trade flows amid geopolitical tensions.

The AUD/USD pair also faces downside pressure as the US Dollar (USD) strengthens, even as safe-haven demand fades amid rising optimism over Middle East peace. US President Donald Trump stated on Thursday that Iran’s military capabilities have been significantly weakened, noting that its missile and drone capacity has been curtailed.

Trump added that the US no longer relies on Middle Eastern oil and emphasized that Iran’s naval and air forces have been severely diminished, with leadership losses further reducing its operational strength, while signaling that the US intends to conclude the conflict swiftly.

Economic Indicator

Trade Balance (MoM)

The trade balance released by the Australian Bureau of Statistics is the difference in the value of its imports and exports of Australian goods. Export data can give an important reflection of Australian growth, while imports provide an indication of domestic demand. Trade Balance gives an early indication of the net export performance. If a steady demand in exchange for Australian exports is seen, that would turn into a positive growth in the trade balance, and that should be positive for the AUD.