Australian Dollar: Strong GDP and carry support – BBH

FXStreet Insights Team FXStreet

Brown Brothers Harriman’s (BBH) Elias Haddad notes AUD/USD fell toward 0.7125 on broad US Dollar (USD) strength, even as Australia’s Q2 GDP beat expectations at 0.4% q/q and 2.1% y/y. Haddad highlights robust household spending and rising Reserve Bank of Australia (RBA) hike odds, with futures now pricing higher tightening, supporting Australia’s attractive carry and commodity-linked tailwinds for the Australian Dollar (AUD).

Growth beat boosts RBA pricing

"AUD/USD dropped to a multi-day low near 0.7125 on broad USD strength. Australia Q2 real GDP growth overshot expectations."

"The economy increased 0.4% q/q (consensus: 0.3%) vs. 0.3% in Q1 to be up 2.1% y/y which is above the RBA’s forecast of 1.9% y/y."

"The details were good and points to resilient consumer spending activity. Household spending made the largest contribution to Q2 GDP growth (+0.2ppt) driven by vehicle purchases."

"RBA cash rate futures raised bets for additional hikes after the GDP release. Odds of a 25bps hike on September 29 jumped from 55% to nearly 80%, while markets moved closer to pricing 50bps of tightening over the next twelve months."

"Bottom line, Australia’s attractive carry alongside the country’s strategic exposure to commodities linked to energy, AI, and defense remain key AUD tailwinds."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

AUD/USD rises to 0.6950 as USD slips on Fed's Warsh

AUD/USD regains traction and extends the bounce toward 0.6950 in the Asian session on Friday. Fed Chair Warsh's comments reinforce the selling pressure on the US Dollar, allowing the pair to stretch higher. Warsh said that he remains committed to delivering price stability without giving away anything on future interest rate path.

USD/JPY falls in symc with USD, gives up 158.00 after Warsh's speech

USD/JPY has come under fresh selling pressure and gives up 158.00 in the Asian session on Friday amid the emergence of fresh US Dollar selling. Fed Chair Warsh's non-committal commentary on the future tightening path, weighs on the US Dollar and the pair.

Gold looks vacillating above $4,150

Gold alternates gains with losses below the key $4,200 mark per troy ounce on Friday. The yellow metal’s irresolute price action comes in response to a modest pullback in the US Dollar and a tepid recovery in US Treasury yields across the board.

Bitcoin steadies at $82,000: The five forces crushing the Uptober rally

Crypto markets have remained under pressure so far in October, with Bitcoin (BTC) sliding below $80,000 earlier this week before recovering to around $82,000 on Friday, as macroeconomic headwinds and cooling demand weigh on the market.

The Fed just got a second hot inflation number. Here's what the diesel signal is really saying

The Federal Reserve (Fed) faces a renewed inflation challenge after two consecutive reports showed price pressure intensifying across the US economy. September's Consumer Price Index (CPI) confirmed accelerating consumer inflation, while the Producer Price Index (PPI) revealed an even sharper rise in business costs. Behind both reports lies a common factor: energy prices.

Everyone's dumping Gold after hot US inflation. Here's why $4,100 could be a floor, not a cliff

Gold (XAU/USD) is recovering from a sharp sell-off triggered by hotter-than-expected United States (US) inflation data released on Wednesday. The precious metal briefly plunged toward $4,073 as investors increased their bets on further Federal Reserve (Fed) interest rate hikes before recovering as US Treasury yields and the US Dollar (USD) reversed their initial gains.