The October trade deficit of $529m came in worse than market expectations which centred on a $350m deficit {CBA(f) -$600m). Australia has been running a trade deficit since December 2011. Deficits have primarily been a result of a fallingterms of trade. The decline in commodity prices over the past two years has seen the value of our exports relative toimports fall. Trade deficits therefore become more likely until volumes are sufficient to offset the price effect. A softer AUDbodes well for export receipts, but pushes up the price of imports.
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Commonwealth Bank