Australia's monthly trade surplus widened from a revised A$7.324 billion in July to A$9.64 billion in August. Exports rebounded on the month while imports recorded a small decline. Much of the increase in headline exports in August was driven by a surge in exports of non-monetary gold, which almost doubled to a record high from the level recorded in July.

In seasonally adjusted terms, the value of exports rose 4.0 percent on the month in August after dropping 1.8 percent in July. Rural goods (around 15 percent of the total) fell 2.6 percent on the month after advancing 7.4 percent previously, but exports of non-rural goods (around 60 percent of the total) rose 0.5 percent after a previous decline of 1.1 percent and services exports (around 20 percent) increased 1.5 percent after falling 0.6 percent previously. Exports fell 1.6 percent on the year in August after dropping 2.2 percent in July.

Seasonally adjusted imports fell 0.4 percent on the month in August, weakening from an increase of 3.4 percent in July. Imports of capital goods fell after a previous increase, while imports of consumption goods and services recorded smaller increases, offset by stronger growth in imports of intermediate and other merchandise goods. Total imports fell 2.6 percent on the year in original terms in August after advancing 2.1 percent in July.

Consensus for goods and services trade in August is a surplus of A$8.9 billion versus July's lower-than-expected surplus of A$8.039 billion.

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.