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Australian GDP overview

Global markets are now gearing up for Australia’s second-quarter (Q2) 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 defend their status-quo during the latest monetary policy meeting on Tuesday. However, the policymaker did cite uncertainty due to the coronavirus (COVID-19)-led economic slowdown.

Other than being the headline economic data, today’s GDP figures become even more important as they portray the Aussie economy’s performance during the pandemic period. Also, AUD/USD struggles to keep the 25-month high and hence the sellers are waiting for directives for fresh entry.

Forecasts suggest the annualized pace of economic growth to come in at -5.3%, below the previous period’s +1.4%, while the quarter-on-quarter (QoQ) numbers could mark the record slump to -6.0% level versus -0.3% prior.

Ahead of the outcome, Westpac said:

Q2 GDP growth is set to take an unprecedented tumble, from -0.3% in Q1 to -6.0% in Q2, due to pandemic-related lockdown measures.

TD Securities also anticipate a downbeat GDP as saying,

The RBA forecasts Q2 GDP to come in at -7% q/q. After the better than expected partial data on construction and capex, the risk is that GDP come in less bad than initially anticipated. We are expecting domestic demand to have fallen a little more than 7% but for net exports to add to GDP to see output on the quarter drop 5.5% leaving GDP -4.8% y/y.

How could it affect the AUD/USD?

AUD/USD currently stays pressured near 0.7370 after stepping back from the multi-month high above 0.7400 the previous day. The pair has been rising heavily in last two weeks amid broad market optimism and a weak US dollar. Also adding to the pair’s run-up could be the latest upbeat PMIs from Australia as well as the RBA’s refrain from any fresh pessimistic comments on Tuesday.

Although major market consensus suggests the GDP figures to extend the latest pullback move, chances of the positive surprise can’t be ruled out considering the Aussie economy’s resilience. In that case, the Aussie pair may quickly regain 0.7400. Technically, the pair is taking a U-turn from a six-month-old ascending trend line, at 0.7420 now, which in turn suggests further weakness towards January 2019 top surrounding 0.7300. Meanwhile, the July 2018 peak near 0.7485 can please the bulls past-0.7420.

Key notes

AUD/USD Forecast: Retreating ahead of Australian Q2 GDP

Australian GDP Preview: Aussie bulls to weather an economic shock?

AUD/USD: Bulls struggle near two-year high ahead of Aussie Q2 GDP

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.

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