The Australian economy grew by 0.5% in Q2 2016, slightly below 0.6% expected. Year over year, the growth rate was a solid 3.3%, within expectations and a generally positive figure. Australia completes 25 years without a recession, a rare feat in the global economy. Consumption expenditure rose by 0.8% q/q while the manufacturing sector squeezed.
AUD/USD was already looking good following the RBA decision and the weak US data. The mixed data from Australia allowed it to stabilize on higher ground but not advance towards the highs seen earlier this year.
Aussie/USD is currently trading at 0.7680. The pair consolidates its rise above the 0.7660 resistance line but could not reach 0.77 or the next cap at 0.7740.
Will the Reserve Bank of Australia and its new chief Phillip Lowe decide on new policy measures following this report? It probably doesn’t take them off course. There were few surprises. So, will they proceed with another rate cut in November? A lot depends on what the Federal Reserve does. The RBA is sensitive to the exchange rate and the Fed undoubtedly has a major impact on the exchange rate.
More: AUD – negative risk in the short term – NAB
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