Aussie GDP Q1 contracts 0.3% QoQ, as expected
|After the RBA left rates unchanged at record lows and stating that monetary policy will remain accommodative, today's key data for Australia has just arrived in the form of Gross Domestic Product for the first quarter as follows...
- Q1 real gdp -0.3 pct QoQ, s/adj (Reuters poll -0.3 pct).
- Q1 real gdp +1.4 pct YoY, s/adj (Reuters poll +1.4 pct).
- Final consumption expenditure -0.4 pct, s/adj.
- Gross fixed capital expenditure -0.8 pct, s/adj.
- Chain price index +1.1 pct.
The data was in line with expectations and AUD/USD is unchanged, testing weekly highs within the vicinity of 0.6950/82.
Description of Gross Domestic Product
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.
So what now?
AUD has rallied to fresh highs in the Asia session, extending NY gains.
Westpac pointed out a number of bullish inputs for the currency which included, global equities, iron ore above $100/tonne, a current account surplus for a full year, outperformance on Covid-19 containment and RBA comfortable with current policy settings.
AUD/USD levels
However, as discussed here, the currency has returned to where markets agreed on prices for the whole of H2 2019. It is going to take a systemic shift in the markets for AUD to catch a bullish extension at this juncture. USD could well be ripe for an upside correction, as per the following analysis:
As for the Aussie chart, failures to back below the long term trend line, bears could target a 38.2% or a 61.8% retracement of the prior monthly impulse or a 100% retracement of the daily impulses to the previous resistance structure.
On the other hand, if the trend line holds, is blue skies from here for a new cyclical bull trend. The RBA could well be the best bet in town, especially if the `federal Reserve has no choice but to go harder to save its economy from collapse.
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