AUD/USD: 21-DMA caps immediate upside ahead of Australia GDP

With the key growth data scheduled for publishing, AUD/USD refrains from extending the previous recovery while taking rounds to 0.6760, under 21-DMA, during Wednesday morning in Asia.

The Aussie pair fails to carry the earlier rise forward as traders are worried ahead of the second quarter (Q2) gross domestic product (GDP) data while the lack of updates on the US-China trade front also contributes to the pullback. It should be noted that the Aussie buyers cheered the Reserve Bank of Australia’s (RBA) refrain from any monetary policy change while also ignoring the central bank’s downbeat concerns for economic growth and inflation pressure.

Earlier in the day, the quote ignored the AiG Performance of Services Index that rallied to 51.4 in August from 43.9 marked in July. It should also be noted that August month numbers of Commonwealth Bank’s services and composite purchasing managers’ index (PMI), which registered 49.2 and 49.5 previous readouts, will also entertain traders.

Other than the Aussie GDP, traders are also waiting for the US-China trade negotiation date as neither the US President Donald Trump’s latest tweets nor comments from Chinese Vice Premier Liu He mentioned anything about the key issue.

Forecasts suggest Australia’s Q2 GDP softened from 1.8% to 1.4% during YoY but likely registering an uptick to 0.5% from 0.4% on a quarterly format. “We pencil in Q2 GDP at +0.6% q/q, +1.6% y/y. This is below the RBA’s +0.8% q/q, 1.7% y/y forecast from the Aug SoMP. Supporting our forecast is a 0.4ppt contribution from trade, 0.4% pick up in private consumption and a 2% increase in public spending. Risks to GDP are to the downside,” says TD Securities.

Investors will also be on the lookout for the US Trade Balance data for July, expected $-53.5B versus $-55.2B, in conjunction with a slew of Federal Reserve policymakers’ speeches that are up for crossing the wires during the US session.

Technical Analysis

While 21-day simple moving average (DMA) level of 0.6762 acts as immediate upside barrier, a three-week-old falling trend-line at 0.6770 offers additional hurdle for the pair’s run-up to 0.6800 and August 13 high near 0.6835. On the downside, 0.6710 and 0.6690/85 area can entertain short-term sellers ahead of pushing them, towards August low of 0.6677.