Search ForexCrunch

After the RBA left rates unchanged at record lows, monetary policy to remain accommodative, today’s data has just arrived in the form of Gross Domestic Product as follows…

  • AUSTRALIA Q1 REAL GDP -0.3 PCT QTR/QTR, S/ADJ (REUTERS POLL -0.3 PCT)
  • 02-Jun-2020 19:30:01 – AUSTRALIA Q1 REAL GDP +1.4 PCT YR/YR, S/ADJ (REUTERS POLL +1.4 PCT)
  • 02-Jun-2020 19:30:01 – AUSTRALIA Q1 FINAL CONSUMPTION EXPENDITURE -0.4 PCT, S/ADJ
  • 02-Jun-2020 19:30:01 – AUSTRALIA Q1 GROSS FIXED CAPITAL EXPENDITURE -0.8 PCT, S/ADJ
  • 02-Jun-2020 19:30:01 – AUSTRALIA Q1 CHAIN PRICE INDEX +1.1 PCT

more to come…

 

 

 

Description of Gross Domestic Product

The Gross Domestic Product released by the Australian Bureau of Statistics is a measure of the total value of all goods and services produced by Australia. The GDP is considered as a broad measure of the economic activity and health. A rising trend has a positive effect on the AUD, while a falling trend is seen as negative (or bearish) for the AUD.

 

So what now?

AUD has rallied to fresh highs in the Asia session, extending NY gains.

Westpac pointed out a number of bullish inputs for the currency which included, global equities, iron ore above $100/tonne, a current account surplus for a full year, outperformance on Covid-19 containment and RBA comfortable with current policy settings.

AUD/USD levels

However, as discussed here, the currency has returned to where markets agreed on prices for the whole of H2 2019. It is going to take a systemic shift in the markets for AUD to catch a bullish extension at this juncture. USD could well be ripe for an upside correction, as per the following analysis:

  • DXY Price Analysis: Bulls looking left for structure, target prior lows, a 61.8% retracement

As for the Aussie chart, failures to back below the long term trend line, bears could target a 61.8% retracement of the prior impulse to the previous resistance structure. On the other hand, if the trend line holds, is blue skies from here for a new cyclical bull trend. The RBA could well be the best bet in town, especially if the `federal Reserve has no choice but to go harder to save its economy from collapse.

Chart to follow…