Australia's goods trade surplus widened from A$5.366 billion in June to A$7.310 billion in June, above the consensus forecast of A$4.9 billion. In seasonally adjusted terms, the value of exports rose 3.3 percent on the month in July after advancing 6.3 percent in June, with exports increasing 8.0 percent on the year after a previous increase of 3.3 percent. Exports of non-rural goods rose 1.9 percent on the month, while there was an increase of 5.9 percent in exports of rural goods. Imports fell 1.3 percent on the month after dropping 1.5 percent previously, with year-over-year growth slowing from 7.0 percent to 3.1 percent.

The Goods Trade Balance measures the difference between imports and exports of tangible goods. 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.