AUD/USD struggles to recover from 2-month lows, stays dangerously close to 0.70

• Disappointing Australian GDP data weighs on the AUD.
• US Dollar Index moves sideways below 97.
• Coming up: ADP employment report and trade balance data from the U.S.

The AUD/USD pair came under heavy bearish pressure in the Asian session after the data published by  the Australian Bureau of Statistics showed that the real GDP in Australia expanded by 2.3% in the fourth quarter after third quarter’s 2.8% growth and gell short of the market expectation of 2.5%. Following a sharp drop to its lowest level since the first week of January, the pair has gone into a consolidation phase but struggled to stage a recovery with the greenback preserving its strength for the sixth straight day. At the moment, the pair is down 0.77% on the day at 0.7027.

Analysing the details of the GDP report, “Growth is clearly being held down by a weak household sector. Housing construction fell 3.4% q/q, while household consumption was up just 0.4% q/q. Interestingly, household consumption growth was weakest in NSW, where spending grew just 0.1% in the quarter, providing some evidence of a wealth effect,” Felicity Emmett, senior economist at ANZ, noted.

Later in the day, the ADP will release the U.S. private sector employment report. Ahead of that data, the US Dollar Index continues to move sideways a little below the 97 mark. In the early Asian session on Thursday, the AiG Performance of Construction Index from Australia will be looked upon for fresh impetus.

Technical levels to consider