AUD/USD Analysis: Q2 GDP to challenge recent Aussie strength
AUD/USD Current Price: 0.6758
- Australian Current Account Balance in Q2 jumped to 5.9B, the first surplus in 44 years.
- Australian Q2 GDP expected to show the slowest pace of growth in two decades.
- AUD/USD nearing a critical resistance at 0.6820, a rally expected beyond it.
The AUD/USD pair fell to 0.6687, its lowest since August 7, later recovering up to a daily high of 0.6763 to close the day a couple of pips below this last. Australia released July Retail Sales, which declined by 0.1% when compared to the previous month, while the Reserve Bank of Australia had a monetary policy meeting and, as expected, policymakers kept the cash rate on hold at 1.0%, leaving doors opened for further cuts. On a positive note, however, the Current Account Balance in Q2 jumped to 5.9B, the first surplus in 44 years, as a result of massive iron ore and coal exports. The substantial trade surplus, however, can’t hide the softness of the domestic economy that forced the central bank to cut rates for two consecutive months but was enough to keep the Aussie afloat throughout the day.
Australia will release the AIG Performance of Services Index and the Commonwealth Bank Services PMI, and later, an update in the country’s Gross Domestic Product. Australian Q2 GDP is expected to have advanced by 0.5% when compared to the previous quarter and by 1.4% yearly basis. If it’s confirmed, it will be the weakest growth in almost two decades.
AUD/USD short-term technical outlook
The AUD/USD pair is trading at a five-day high ahead of the Q2 GDP release, with a positive technical stance in its 4 hours chart, trading above its 20 and 100 SMA for the first time in over a week. The moving averages remain directionless, while the 200 SMA keeps heading lower, offering a dynamic resistance at 0.6820. Technical indicators in the mentioned chart hold within positive levels although now losing their bullish strength. The market is already aware that GDP could disappoint, which means that the pair could post a larger reaction on a positive surprise than to a negative one.
Support levels: 0.6740 0.6700 0.6675
Resistance levels: 0.6790 0.6820 0.6855
Author
Valeria Bednarik
FXStreet
Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.
