• The Australian Dollar gains ground after Australia’s Trade Balance unexpectedly returns to surplus territory.
• Australian exports rebound strongly, supporting the country’s economic outlook.
• Persistent Middle East tensions continue to underpin demand for safe-haven assets.

AUD/USD trades around 0.7135 at the time of writing on Thursday, up a modest 0.08% on the day, as the Australian Dollar (AUD) benefits from the release of stronger Australian trade data.

Data released by the Australian Bureau of Statistics showed that the Trade Balance returned to a surplus of A$1,791M in April, following a revised deficit of A$1,024M in the previous month.

In detail, exports rose 7.2% MoM in April after declining 2.5% in March. Imports increased 0.8%, compared with a 12.2% rise in the previous month. The rebound in external trade is seen as a positive signal for the Australian economy and could reinforce expectations that the Reserve Bank of Australia (RBA) will maintain a restrictive monetary policy stance for an extended period.

However, the Aussie’s upside remains limited by a geopolitical environment that continues to be marked by elevated uncertainty. Investors remain focused on developments surrounding the conflict in the Middle East. Iranian Foreign Minister Abbas Araghchi said on Wednesday that no tangible progress had been made in negotiations aimed at ending the hostilities, despite ongoing contacts with Washington.

Meanwhile, Lebanese President Joseph Aoun stated that he is awaiting responses from all parties regarding an agreement reached with Israel to implement a ceasefire. While these developments have provided a modest boost to risk sentiment, markets remain cautious amid the lack of meaningful progress in regional negotiations.

Market participants are now turning their attention to upcoming US data releases, with Initial Jobless Claims due on Thursday ahead of Friday’s May Nonfarm Payrolls (NFP) report. Economists expect the US economy to have added 85K jobs while the Unemployment Rate is forecast to remain unchanged at 4.3%, figures that could influence expectations for the future policy path of the Federal Reserve (Fed).