A biiger-than-expected trade deficit for January hurt the Australian dollar in the Asia session but overall trading was subdued.
Australia posted a seasonally adjusted trade gap of $1.06 billion in January, compared with $688 million in December and the $500m shortfall expected by economists.
Exports dropped 1 per cent while imports rose 1 per cent, the Australian Bureau of Statistics said today.
It is Australia's 13th consecutive monthly trade deficit.
"We suspect that the gradual improvement in exports in the fourth quarter was temporarily interrupted in January due to some natural statistical pullback and adverse weather events," Citi economists said in a note.
"We do not however view January's decline as the start of a trade partner based moderation in demand."
Before the data, the Australian dollar was trading at 1.0230 US cents. After the release, it hit a day low of 1.0219 US cents before buyers returned.
At 4.40pm AEDT it was 1.0249 US cents.
Earlier today, there were more signs of a pick-up in Australia's economy.
Construction activity in February reached its strongest level since June 2010, buoyed by expansion in home building and engineering construction.
The data is the latest evidence to suggest near-record-low interest rates are spurring an economic recovery.
The Australian Industry Group/Housing Industry Association construction performance index rose 9.4 points to a reading of 45.6 in February from January.
"The data isn't a game changer as the index remains in contraction territory but it's a step in the right direction," Forex.com research analyst Chris Tedder said.
Bond-market yields are likely to stay in a tight range even as foreign demand for the nation's debt cools, ANZ Strategist Tony Morriss said.
"The recent tempering of overseas ownership of bonds is easy to over read," Mr. Morris said. "We feel investors are moving further out the curve and credit spectrum or into higher yielding T-notes and so remain constructive on semis despite the liquidity premium and recent supply," he said.