The Q2 GDP came-in at 1.8% y/y, compared to the previous quarter’s print of 1.7%. The quarter-on-quarter number printed at 0.8%, The details of the GDP report show Household final consumption expenditure increased 0.7% and government final consumption expenditure increased 1.2%. Exports of goods and services rose 2.7% for the quarter.
The AUD/USD fell from 0.8020 to 0.7990 in a knee jerk reaction to GDP data. Moreover, expectations of a better-than-expected print were built-in following the Aussie current account data release yesterday. The 10-year Aussie government bond yield hit an intraday low of 2.606% before recovering slightly to 2.611%.
The pull back in the AUD/USD pair could be short lived as the US 10-year yield fell to a 10-month low 2.054%. The yield may extend losses if the risk-off tone persists today. Thus, the USD may remain on the back foot, while the uptick in the gold prices could strengthen the bid tone around the Aussie dollar.
AUD/USD price action
The spot currently hovers around the session low of 0.7990. On the downside, support is seen at 0.7967 [5-DMA] and 0.7947 [10-DMA], under which the psychological level of 0.79 could be put to test. On the higher side, a break above 0.8028 [previous day’s high] would open doors for 0.8043 [Aug 1 high] and 0.8066 [July 27 high].
“The 4 hours chart shows that the price is anyway holding above a bullish 20 SMA and the 61.8% retracement of the July/August decline at 0.7965, now the immediate support. Technical indicators in the mentioned chart have retreated sharply from overbought readings, now approaching their mid-lines. It would take a break below the mentioned Fibonacci support, to confirm a downward extension for this Wednesday.”
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