Australian Dollar edges higher as Trade Balance shifts back into surplus

The AUD/USD pair gathers strength to around 0.7135 during the early Asian session on Thursday. The Australian Dollar edges higher against the US Dollar (USD) following the domestic Trade Balance data. The US May Nonfarm Payrolls (NFP) report will take center stage later on Friday. 

Australia's Trade Balance shifted back into a monthly surplus of $1,791M MoM for April, according to the Australian Bureau of Statistics (ABS) on Thursday. This figure followed a deficit of 1,024M in the previous reading (revised from $1,841M). 

Meanwhile, Australia's Exports climbed by 7.2% MoM in April from a fall of 2.5% seen a month earlier (revised from -2.7%). Imports increased by 0.8% MoM in April, compared to a rise of 12.2% seen in March (revised from 14.1%). 

A better trade balance figure can signal strong export demand or a resilient economy. This report could lead markets to expect that the Reserve Bank of Australia (RBA) will hike interest rates or keep them elevated, supporting the Aussie. 

On the other hand, ongoing tensions in the Middle East and a lack of progress in the US-Iran peace deal could boost a safe-haven currency such as the Greenback. Iran’s Foreign Minister Abbas Araghchi said on Wednesday that while contact with Washington has not been cut off, negotiations to end the Middle East war had made "no tangible progress.”