AUD/USD testing the vicinity of key 0.7020 territory
|- AUD/USD is stabilising just above a key support level of 0.7720.
- AUD is the notable underperformer in the G10 FX basket (-0.8%) following the Q4 GDP miss.
- AUD/USD is currently trading at 0.7023 and trading within a range of 0.7021 and 0.7092.
The major catalyst for the Aussie has been the GDP data comments from RBA's Lowe. For some background, the GDP expanded by 2.8% in 2016, below trend 2.4% in 2017 and 2.8% in 2018, yet the labour market remains 'strong' and wages are rising, albeit gradually. However, GDP rose a modest 0.2% q/q in Q4, following a rise of 0.3% in Q3. Annual growth edged down to 2.3% from a downwardly revised 2.7% in Q3 (previously 2.8%).
"Looking at Q3 and Q4 together shows that annualised growth in the second half was 0.9%, a sharp step down from 3.8% in H1, with a notable softening in the household sector. The result is significantly weaker than the RBA’s forecast of 2.8% y/y published in the February Statement on Monetary Policy."
The RBA expects GDP growth to return to 3%/y by the end of this year, and average 2¾% over 2020. Meanwhile, soften the blow of the data, bulls took some comfort in the Governor's speech beforehand when Lowe reiterated that the strong labour market is an important offset to falling house prices, and the February report is released 21 March.
In the U.S., yesterdays ISM manufacturing was a boost for the greenback and for the week ahead, following two consecutive labour reports with initial 300k+ prints, nonfarm payrolls could show a mean-reversion to 190k in February. according to analysts at TD Securities. "We also expect the phase-out of the impact from the government shutdown to be reflected on a tick down in the unemployment rate to 3.9%. Lastly, we forecast wages to rise by a “soft” 0.3% m/m pace (3.3% y/y) in February aided by a favorable reference week."
AUD/USD levels
Analysts at Commerzbank explained that AUD/USD last week saw an initial rejection from just ahead of .7200 and is now weighing on the downside very near term. and target 0.7022/15 (50% retracement) and possibly .6950.
"Rallies will find initial resistance at .7207 and are likely to remain capped by the 0.7248 200 day ma. Price action in January was exhaustive – the market charted a hammer (reversal). We have a TD perfected setup on the daily chart and a 13 count on the weekly chart. This suggests the down move ended at 0.6738."
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.