A drop in the Australian dollar (NYSEARCA:FXA) toward a fresh six-year low has not stopped Australia's trade balance from worsening. The Australian Bureau of Statistics (ABS) reported that February's seasonally adjusted balance on goods and services fell from -$A1.00B to -$A1.26B on a surge of imports (+$A534M) that far surpassed an increase in exports (+$A282M).

The rapid plunge from the first half of 2014 has yet to resume but year-over-year declines continue. Source: The Australian Bureau of Statistics (ABS)

The Australian dollar quickly sold off going into the report on Australia’s February trade balance, but the urge to sell quickly dissipated from there…

CurrencyShares Australian Dollar ETF (FXA) is back to multi-year lows. Source for currency charts: FreeStockCharts.com

Unsurprisingly, metal ores and minerals, including iron ore and coal, were the biggest drag on exports with a decline in value of $A248M. Exports of “rural goods”, like agricultural products, did most of the heavy-lifting for exports with a gain of $A390M. {snip}

With iron ore breaking through the $50/tonne mark and hitting a 10-year low, the price of Australia’s largest export is finally reaching the revised targets of several analysts.

I continue to watch Rio Tinto (RIO) for clues as to whether the market thinks a bottom in prices is nearing. Year-to-date, the stock has proven quite resilient in the face of iron ore’s persistent plunge.

Despite a drop of 28% in iron ore prices, Rio Tinto (RIO) has yet to break through the low hit in December, 2014

Declining iron ore seems to be greasing market expectations for another rate cut in Australia.

Be careful out there!

(This is an excerpt; Click here to read the entire piece originally published on Seeking Alpha.)