Australia’s trade surplus widened to 5,686M month-on-month in February, up from 2,258M in the previous reading (revised from 2,631M). The market forecast was 2,500M, based on Australian Bureau of Statistics data released on Thursday. Exports rose 4.9% month-on-month in February after a 1.6% fall in January (revised from -0.9%). Imports fell 3.2% month-on-month after a 1.1% rise in January (revised from 0.8%).

Market Reaction And Timing

At press time, AUD/USD was down 0.05% on the day at 0.6925. A preview section published on April 1 at 22.30 GMT noted the release time of 00.30 GMT. Technical levels referenced for AUD/USD included 0.6962, 0.7025 and 0.7100 on the upside. On the downside, levels cited were 0.6895, the 100-day EMA at 0.6865, and 0.6833. The article also lists drivers of the Australian Dollar, including RBA interest rates, inflation targets of 2–3%, China’s economic conditions, and trade balance outcomes. It notes iron ore as Australia’s largest export, at $118 billion a year using 2021 data. The latest trade data shows a significant surplus, much larger than anyone expected, fueled by a surge in exports and a surprising drop in imports. This reflects a strong underlying performance in Australia’s trade sector. We must consider this a fundamentally positive signal for the Australian dollar.

Context And Strategy

However, we must also look at what happened in a similar situation back in early 2025. A massive trade surplus beat at that time failed to produce a meaningful rally in the AUD because global market sentiment was the main driver. This reminds us that strong local data can easily be overshadowed by bigger international stories. Today, the Reserve Bank of Australia is holding interest rates steady at 4.35%, and recent inflation data has been stickier than anticipated. This has forced the market to push back expectations for any rate cuts this year. A central bank that is hesitant to cut rates is generally supportive for its currency. At the same time, the outlook from our biggest trading partner, China, is improving. Recent data showed China’s Caixin Manufacturing PMI rose to 51.1 in March 2026, beating forecasts and marking the fifth straight month of expansion. This suggests growing demand for raw materials, which is good news for our exports like iron ore, now hovering around $110 per tonne. Given these competing factors, outright long positions on the AUD/USD feel risky. The positive domestic data and a hawkish RBA are pitted against the memory of how global sentiment can dominate. This environment is ideal for using options to manage risk. Therefore, traders should consider buying near-term AUD/USD call options. This strategy allows for capitalizing on potential upside towards the 0.6700 level if the positive local factors prevail. The premium paid for the option represents the maximum risk, protecting against a sudden downturn caused by external shocks. Create your live VT Markets account and start trading now.

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