Aussie GDP, AUD Analysis
- Aussie growth stalls in Q1, growing just 0.1% during the quarter
- Household spending dominated by essentials as discretionary purchases flatline
- AUD/USD appears unperturbed but the currency has sold-off notably in recent times
- The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library
Aussie Growth Stalls in Q1, Growing Just 0.1% over the Quarter
Aussie growth has been under pressure, with annualized real GDP declining, or remaining flat, every quarter since the start of 2023. The annualized figure missed estimates of 1.2% to come in at 1.1%, while the quarter on quarter figure rose a meagre 0.1%.
Household spending, which accounts for roughly 50% of Australian GDP was fractionally stronger at 1.3% but the majority of spending was channeled to essentials like electricity and healthcare as discretionary spending flattened out.
Dreamboot Wealth Institute
The economy is taking strain with interest rates at 4.35% but Michele Bullock expressed that policy needs to remain restrictive to bring demand and supply into greater balance. Markets do not anticipate another rate hike but equally, they do not anticipate a rate cut any time soon either. There is a little under 50% chance of a 25 basis point (bps) cut in December but a full cut is only priced in for July next year – suggesting in the absence of a drastic drop in inflation or seriously adverse economic conditions, rates will remain where the are for an extended period.
Market-Implied Basis Point Adjustments Going Forward
Source: TradingView, prepared by Richard Snow
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AUD/USD Finds Resistance but a Softer USD May Underpin Price Action
AUD / USD appears unperturbed by the lackluster growth but the currency registered a minor decline against the Kiwi dollar (at the time of writing). AUD/USD now tests the 0.6644 level which capped prices between March and May and offers support for the pair.
The market serves as a potential tripwire for a bearish continuation but conviction in recent moves lacks conviction. With both central banks looking to eventually cut interest rates, the timing of such a decision remains elusive. Although, weakening US data places the Fed in pole position when it comes to the two nations. US services PMI data today could see further weakness for the greenback following from the manufacturing sector extending the contraction further.
US NFP data will be the next major piece of relevant data but ADP private payroll data always carries the potential to provide intra-day volatility but tends not to see massive moves ahead of the more closely watched US jobs data on Friday.
Resistance remains at the swing high of 0.6714 with 0.6730 not far away.
AUD/USD Daily Chart
Source: TradingView, prepared by Richard Snow
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AUD/USD
Bearish
of clients are
net long.
of clients are
net short.
| Change in | Longs | Shorts | OI |
| Daily | -4% | -11% | -7% |
| Weekly | 5% | -23% | -9% |