Australian bonds gain as trade balance data disappoints, markets eye RBA policy statement

The Australian bonds gained Thursday as investors shifted to safe-haven assets buying after the country’s trade balance data disappointed by missing market expectations. Also, the markets remained cautious ahead of the RBA monetary policy statement due for Friday.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell nearly 3 basis points to 2.685 percent, the yield on 15-year note slid 2-1/2 basis points to 2.99 percent and the yield on short-term 2-year traded nearly 1-1/2 basis point lower at 1.792 percent by 04:20 GMT.

Australia's trade balances came at AUD 856 million in June, way lower than the AUD 1.8 billion expectations from the market and also lower than the previous print of AUD 2.471 billion, with exports coming at -1% vs 9% prior, while imports saw a 2% increase vs 1% prior.

On Tuesday, the RBA kept benchmark cash rate at a record low of 1.5 percent, while warning that strength in the Australian dollar is expected to weigh on inflation and growth. Other than the comments on currency, the Australian central bank kept its verbiage largely unchanged from its prior statement. It pointed to a gradually improving economy, though rising household debt remained a concern.

Lastly, markets will now be focusing on the country’s retail sales for the month of June, scheduled to be released on August 4 by 01:30GMT, which will provide further direction in the debt market.

Meanwhile, the S&P/ASX 200 index traded 0.38 percent lower at 5,722.20 by 04:20 GMT, while at 04:00GMT, the FxWirePro's Hourly AUD Strength Index remained highly bearish at -137.51 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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