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The Australian Dollar found support following another data release confirming Australia continues to run a trade surplus, however a peak in global commodity prices and headwinds facing the global economy suggest the potential for underperformance according to analysts.

The ABS on Thursday said Australia's trade surplus shrunk in August amidst a pick up in imports.

The seasonally adjusted balance on goods and services surplus decreased A$643m amidst a jump in imports by 4.5% to A$2,077m, driven by fuel and lubricants.

This overshadowed a rise in exports to $1,434m (2.6%), driven by coal, coke and briquettes.

"Australia's August trade surplus was below expectations. But it was still a surplus, lending background support to the Australian Dollar," says Sean Callow, Senior Currency Strategist at Westpac.

A positive trade surplus offers a fundamental source of support for a currency as it implies a country is earning more in foreign currency than it spends.

Australia's trade surplus has ballooned over recent months as the value of Australia's commodity exports rocketed, and amidst a decline in demand for imports owing to the economic slowdown wrought by Covid.

But signs commodity prices have peaked and an ongoing post-covid recovery, combined with the rise in the value of other important imports, means the trade surplus is declining.

The health of the global economy, and particularly China, will remain of importance to the Australian Dollar going forward; after all, it is Chinese demand that drives the country's supportive trade position.

A risk is that a further deterioration in global growth pushes commodity prices lower, negatively impacting Australia's international earnings potential.

"We expect AUD to stay weak because the global economic outlook is poor and commodity prices look to have peaked," says economist Kim Mundy at Commonwealth Bank of Australia.

The Australian Dollar has been one of 2022's better-performing currencies thanks to the surge in commodity prices over the first half of the year, but this impulse has worked through and prices are trending lower as investors anticipate declining global demand.

The Australian Dollar has been an outright underperformer over the course of the past month with much of the decline following this week's Reserve Bank of Australia decision to raise interest rates 25 basis points.

Markets were positioned for another 50bp hike and the disappointment was reflected in a weaker Aussie Dollar.

The Pound to Australian Dollar rose 1.57% on the day of the decision, hitting a high of 1.7709. The pair is back to 1.74 at the time of writing, taking Aussie Dollar bank transfer rates to approximately 1.6917 and payment rates at transfer specialists to approximately 1.7352.

Above: GBP/AUD (top) and AUD/USD (bottom) at daily intervals. To better time your payment requirements, consider setting a free FX rate alert here.

Against the U.S. Dollar, the Aussie remains under pressure although September has seen the AUD/USD pair consolidate in a tight range between 0.64 and 0.65.

"AUD/USD outperformed in the Asia session and is trading near 0.6530," says Mundy. "Higher commodity prices and a lift in US equity futures propped up AUD."

With regards to GBP/AUD, Mundy says a recent uptick in commodity prices is distinctly negative for the Pound, given the UK's high dependency on oil and gas imports.

"GBP/AUD eased towards 1.7400. Firmer commodity prices are a weight on GBP/AUD. We maintain that GBP can ease further amid global growth concerns, uncertainty stemming from the war in Ukraine and concerns about UK fiscal policy. We also expect the UK economy will fall into recession by the end of 2022," says Mundy.

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