- Australia’s economy outperformed expectations in the second quarter.
- The RBA decided to keep interest rates unchanged.
- Australia’s economy remains vulnerable due to elevated interest rates and global uncertainties.
Today’s AUD/USD price analysis is slightly bullish. AUD/USD rose as Australia’s economy outperformed expectations in the second quarter. However, household consumption remained weak due to historically high interest rates aimed at curbing demand.
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On Wednesday, the Australian Bureau of Statistics revealed that real gross domestic product (GDP) increased by 0.4% in the second quarter. This figure surpassed the anticipated 0.3%. Moreover, it followed an upwardly revised 0.4% growth in the first quarter. Meanwhile, annual growth reached 2.1%, exceeding the expected 1.8%.
Harry Murphy Cruise, an economist from Moody’s Analytics, remarked, “Despite its challenges, the Australian economy remains remarkably resilient.” Nevertheless, household consumption saw only a modest 0.1% increase in the quarter.
Consumers continued to save less as they grappled with the high cost of living and a steep 11% rise in mortgage repayments during the quarter. Consequently, their savings ratio dropped to 3.2%, marking its lowest since 2008.
Meanwhile, the RBA decided to hold interest rates unchanged for the third consecutive month on Tuesday. Recent data pointed to a more significant than expected easing of inflation and a slowdown in economic growth.
Financial markets perceive the likelihood of the RBA’s policy adjustments as low. However, most economists anticipate one more rate hike by year-end to rein in inflation.
Treasurer Jim Chalmers described the GDP report as a “steady and sturdy” outcome given the challenging circumstances. However, he expects the economy to decelerate significantly due to elevated interest rates and global uncertainties.
AUD/USD key events today
The S&P Global and the Institute of Supply and Management (ISM) will release US PMI data later today.
AUD/USD technical price analysis: Price bounces back after dipping below 0.6400.
On the charts, AUD/USD has recovered slightly after a decline that saw the price break below the 0.6400 support level. The rebound has allowed bulls to retest this level. However, the general direction remains down as the price trades well under the 30-SMA.
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Bearish momentum is also strong, with the RSI below 50. Therefore, the 0.6400 level will likely hold firm as resistance. From here, the price will likely drop to 0.6350 support.
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