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Australian GDP overview

Global markets are now gearing up for Australia’s first-quarter (Q1) Gross Domestic Product (GDP) figures, up for publishing at 01:30 GMT on Wednesday.

The recent data from Australia have been upbeat, which in turn have helped the Reserve Bank of Australia (RBA) to sound a bit optimistic during its latest statement published on Tuesday. Also, the AUD/USD pair trades close to a five-month top amid overbought RSI conditions on the daily chart. As a result, sellers are waiting for any major disappointments from the key data for fresh entry.

Forecasts suggest the annualized pace of economic growth to come in at 1.4%, below the previous period’s 2.2%, while the quarter-on-quarter (QoQ) numbers are expected to mark -0.3% level versus +0.5% prior.

Ahead of the outcome, Westpac said:

Westpac is forecasting GDP to contract -0.4% in the quarter (matching consensus), leaving it just 1.3% higher than a year ago. Q2 will of course show a record-breaking fall (due early Sep).

TD Securities also anticipate a downbeat GDP as saying,

We expect GDP to contract 0.5% in Q1. This will be the first decline since Q1 2011 taking annual growth drop from 2.2% to 1.3% in Q1. The release is unlikely to impact markets given markets are positioning for a recovery.

How could it affect the AUD/USD?

AUD/USD probes January 2020 high while taking the bids near 0.6930 by the press time of initial Tokyo open on Wednesday. The pair has been rising heavily since the week’s start amid broad market optimism and weak US dollar. Also adding to the pair’s run-up could be the latest upbeat PMI data from Australia as well as the RBA’s refrain from any downbeat comments on Tuesday.

Although major market consensus favors the GDP figures to offer a pullback move, chances of the positive surprise can’t be ruled out considering the survey period that could fall short of considering the coronavirus (COVID-19)-led lockdowns. In that case, the Aussie pair may quickly rise towards 0.7000 round-figrues.

In this regard, FXStreet’s Valeria Bednarik says, “a Q1 GDP reading in-line with the market’s expectations, or even slightly worse, should keep the pair on its bullish track toward the psychological 0.7000 threshold. A pullback would find an immediate support level at 0.6810, followed by the 0.6750 price zone. Below this last, the pair has room for a steeper bearish correction, although it seems quite unlikely at the time being.”

Key notes

AUD/USD: Bulls keep the reins above 0.6900 ahead of Aussie Q1 GDP

AUD/USD Forecast: Overbought in the short term, but still bullish

Australian GDP Preview: Modest economic contraction won’t affect Aussie strength

About the Aussie GDP release

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.