Chinese Gross Domestic Product (GDP) is a measurement of the production and growth of the economy, and analysts consider GDP one the most important indicators of economic activity. A reading which is better than the market forecast is bullish for the Australian dollar.
Here are all the details, and 5 possible outcomes for AUD/USD.
Published on Monday at 2:00 GMT.
Indicator Background
Chinese GDP is released quarterly, and provides an excellent indication of the health and direction of the economy. Traders should pay close attention to this key release, as China is Australia’s number one trading partner, and an unexpected reading can quickly affect the direction of AUD/USD.
Chinese GDP edged up to 6.8% in Q4, just above the forecast of 6.7%. No change is expected in the Q1 report.
Sentiments and levels
The US consumer remains optimistic about the economy but is not spending, which has put a damper on consumer inflation and spending levels. At the same time, monetary divergence favors the US dollar. So, the overall sentiment is bearish on AUD/USD towards this release.
Technical levels, from top to bottom: 0.7835, 0.7741, 0.7605, 0.7513, 0.7429 and 0.7311.
5 Scenarios
- Within expectations: 6.2% to 7.2%: In such a case, AUD/USD is likely to rise within range, with a small chance of breaking higher.
- Above expectations: 7.3% to 7.7%: An unexpected higher reading can send the pair above one resistance line.
- Well above expectations: Above 7.7%: Given the current trend, the likelihood of a sharp expansion is low. Such an outcome would push the pair upwards, and a second resistance line might be broken as a result.
- Below expectations: 5.7% to 6.1%: A sharper decrease than forecast could push AUD/USD downwards and break one level of support.
- Well below expectations: Below 5.7%: A poor reading would likely hurt the Australian dollar. This outcome could push the pair below a second support level.
For more on the Australian dollar, see the AUD/USD forecast.
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