Search ForexCrunch

Australian GDP is the primary  gauge of the production and growth of the economy. It is considered by analysts as one the most important indicators of economic activity. A reading which is higher than expected is bullish for the Australian dollar.

Here are all the details, and 5 possible outcomes for AUD/USD.

Published on Wednesday at 00:30 GMT.

Indicator Background

Australian GDP is released on a quarterly basis, and provides an excellent indication of the health and size of the Australian economy. An unexpected reading can quickly affect the movement of AUD/USD.

GDP  for Q3  slipped to  0.3%, well short of the estimate of 0.7%.  The markets are expecting a strong improvement in the Q4 reading, with an estimate of 0.7%. Will the indicator meet or beat this prediction?

Sentiments and levels

With a host of Australian data this week, we can expect some movement from AUD/USD. If the RBA reduces rates as expected, we could see the Aussie lose ground. In the US, Fed chair Yellen tried to dampen expectations about a mid-rate hike in her Congressional testimony, but a strong NFP could boost the June rate expectations.. So, the overall sentiment is bearish on AUD/USD towards this release.

Technical levels, from top to bottom: 0.8150, 0.7978, 0.7904, 0.7799, 0.7601 and  0.7403.

5 Scenarios

  1. Within expectations: 0.4% to 1.0%. In such a scenario, the AUD/USD is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 1.1% to 1.5%: An unexpected higher reading can send  the pair  above one resistance line.
  3. Well above expectations: Above 1.5%: The chances of such a scenario are low. Such an outcome could push AUD/USD upwards, and a second resistance line might be broken as a result.
  4. Below expectations: -0.1% to 0.3%:   A  weak GDP figure could cause the  pair to fall and break one level of support.
  5. Well below expectations:  Below -0.1%. A contraction in GDP could see the pair drop below a second support level.

For more on AUD/USD, see the Australian dollar forecast.

To follow this event live:   [do action=”calendar-event” eventid=”ea62704e-57a4-4d22-856f-ad642047bdc7″/]