Australia's monthly trade surplus widened from A$11.266 billion in January to A$13.870 billion in February. Imports fell sharply on the month, while exports also showed renewed weakness.

In seasonally adjusted terms, the value of exports fell 2.9 percent on the month in February after an increase of 1.4 percent in January, which was the first increase since September. Exports of non-rural goods (around 60 percent of the total) fell 4.0 percent on the month after advancing 1.7 percent previously, and growth in services exports (around 20 percent) slowed from 3.7 percent to 0.5 percent. This was partly offset by a rebound in exports of rural goods (around 15 percent of the total), which rose 3.4 percent after a previous decline of 4.0 percent. Year-on-year growth in total exports picked up from 13.2 percent in January to 18.5 percent in February.

Seasonally adjusted imports fell 9.1 percent on the month in February, down sharply from the increase of 5.5 percent recorded in January. This weakness was broad-based, with imports of consumption goods, capital goods, intermediate and other merchandise goods, and services all posting month-over-month declines, with most categories falling substantially. This also resulted in a big fall in year-over-year growth, down from an increase of 27.5 percent in January to a decline of 1.1 percent in February.

Consensus for goods and services trade in February is a surplus of A$11.7 which would match January's surplus of A$11.7 billion. Exports in January posted the first monthly advance, at 1.4 percent, since last September.

The Merchandise Trade Balance measures the difference between imports and exports of both tangible goods and services. The level of the international trade balance, as well as changes in exports and imports, indicate trends in foreign trade.

Changes in the level of imports and exports, along with the difference between the two (the trade balance) are a valuable gauge of economic trends here and abroad. While these trade figures can directly impact all financial markets, they primarily affect the value of the Australian dollar in the foreign exchange market. Imports indicate demand for foreign goods while exports show the demand for Australian goods in its major export market China and elsewhere. The currency can be sensitive to changes in the trade balance since a trade imbalance creates greater demand for foreign currencies. The bond market is also sensitive to the risk of importing inflation. A word of caution -- the data are subject to large monthly revisions. Therefore, it can be misleading to form opinions on the basis of one month's data.