Australia's monthly trade surplus narrowed from A$14.822 billion in March to A$11.158 billion in April. Imports rose on the month, but exports fell for the fourth time in the last six months.

In seasonally adjusted terms, the value of exports fell 5.0 percent on the month in April after an increase of 4.1 percent in May. Exports of non-rural goods (around 60 percent of the total) fell 6.1 percent on the month after advancing 3.8 percent previously, reflecting declines in both the volume and value of iron ore and coal exports. Exports of rural goods (around 15 percent of the total) weakened sharply from an increase of 12.4 percent to a decline of 9.3 percent, while services exports (around 20 percent) rose 7.8 percent on the month after a previous increase of 2.4 percent. Year-on-year growth in total exports slowed from 16.9 percent in March to 2.0 percent in April.

Seasonally adjusted imports rose 1.6 percent on the month in April after the increase of 3.7 percent recorded in May. Imports of consumption goods and intermediate and other merchandise goods recorded weaker growth on the month, but imports of capital goods rebounded while imports of services posted a bigger month-over-month increase. The increase in capital imports reflected a one-off purchase of aircraft. Imports rose 6.7 percent on the year after advancing 6.2 percent previously.

Consensus for goods and services trade in April is a surplus of A$14.0 billion versus March's surplus of A$15.269 billion, a report that saw rebounds for both imports and especially exports.

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.