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Australian Gross Domestic Product (GDP) measures the production and growth of the economy. It is considered by analysts as one the most important indicators of economic activity. A GDP reading which is higher than forecast by the markets is bullish for the Australian dollar.

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

Published on Wednesday at 1:30 GMT.

Indicator Background

Australian  GDP is released quarterly and is a crucial  indicator of the health and direction of the economy. Traders should pay close attention to the GDP release and treat it as a potential market-mover, as an unexpected reading can affect the movement of AUD/USD.

The GDP reading for  Q1 was a strong 1.3%, the best quarterly result in over three years. The markets are expecting a lower gain in Q2, of 0.9%.

Sentiments and levels

After impressive gains this summer, the shine on the Australian dollar is fading. The continuing turmoil in Europe and mixed data out of the US has reduced demand for risky currencies such as the Australian dollar. As well, the fact that QE is unlikely in the very near future is bullish for the US dollar. Thus, the overall sentiment is bearish on AUD/USD towards this release.

Technical levels, from top to bottom: 1.0402, 1.0340, 1.0230, 1.0174, 1.0080 and 1.00.

5 Scenarios

  1. Within expectations: 1.0% to 1.6%. In such a scenario, the AUD/USD is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 1.7% to 2.0%: An unexpected higher reading can send  the pair  well above one resistance line.
  3. Well above expectations: Above 2.0%: 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: 0.6% to 0.9%:  A weak reading could cause the  pair to fall and break through one level of support.
  5. Well below expectations:  Below 0.6%. In this scenario, AUD/USD  could  fall and could break a second  support level.

For more on the aussie, see the AUD/USD forecast.