Australian Dollar climbs despite weak trade balance data, NFP in focus

• AUD/USD rises for the second consecutive day, trading near 0.6514; up 1.20% this week.
• Australian trade surplus narrows, weaker exports partly offset by upbeat China PMI.
• US Initial Jobless Claims climb to 247K, DXY drops to 98.35 before recovering.
• Fed speeches due later Thursday; US NFP report on Friday to guide next moves.

The Australian Dollar (AUD) extends its rally against the US Dollar (USD) for a second day on Thursday, brushing aside weak domestic data as the Greenback loses ground following a string of disappointing US economic releases.

At the time of writing, the AUD/USD pair is trading around 0.6514, near the previous week's high, and is up nearly 1.30% so far this week. The 0.6500 mark remains a key technical barrier that has capped upside attempts since mid-May. With the pair now holding slightly above this level, traders are watching closely for a potential breakout that could confirm a shift in short-term momentum.

Data released earlier on Thursday showed that Australia's trade surplus in goods narrowed to AUD 5.41 billion in April 2025, down from AUD 6.89 billion in March and below market expectations of AUD 6.10 billion. The weaker print came as exports declined by 2.4%, while imports rose 1.1%, reflecting a slowdown in outbound shipments alongside steady demand for overseas goods. Still, the Aussie found some support from upbeat Chinese data, with the Caixin Services PMI rising to 51.1 in May from 50.7 the previous month. The stronger print helped alleviate concerns about slowing global growth and provided a modest boost to risk sentiment.

Meanwhile, the US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, weakened initially after soft economic data, with Initial Jobless Claims rising to 247,000, above the expected 235,000 and marking the highest reading since October. The DXY fell to 98.35 following the release but quickly reversed course, paring all losses to trade near 98.81 at the time of writing.

Looking ahead, attention turns to speeches from Federal Reserve (Fed) officials Harker and Schmid later on Thursday, which may offer fresh clues on the policy outlook. Meanwhile, Friday's US Nonfarm Payrolls (NFP) report will be key for gauging the strength of the labor market and shaping expectations for future rate cuts.