When is the Aussie Q3 GDP release and how could it affect the AUD/USD?

Australian GDP overview

Baffled by the pandemic-led local lockdowns and the Reserve Bank of Australia’s (RBA) cautious optimism, not to forget the latest Omicron woes and hawkish Fed, AUD/USD traders gear up for Australia’s third-quarter (Q3) Gross Domestic Product (GDP) figures, up for publishing at 00:30 GMT on Wednesday.

The recent data from Australia have been downbeat and lockdowns are likely to weigh on the Aussie GDP figures. However, the RBA defends bond purchase tapering while staying cautiously optimistic on the economic growth.

Other than being the headline economic data, today’s GDP figures may have little importance as the covid strain woes and comments from Fed’s Powell seem to already weigh on the quote. Additionally, the growth figures are likely to show the lockdown-led economic loss which has little importance of late as the Pacific major has already jumped on the unlock path.

Forecasts suggest the annualized pace of economic growth to come in at +3.0%, below the previous period's +9.6%, while the quarter-on-quarter (QoQ) numbers could mark the disappointment if easing to -2.7% versus 0.7% prior.

Ahead of the outcome, Westpac said:

The delta lockdowns in NSW and Vic have certainly harmed activity, but the damage is less than originally feared. A sharp fall in consumer spending and weakness in business investment is expected to be partially offset by support from home building and net exports. Westpac’s forecast of -2.5% broadly aligns with the market median.

TD Securities expects,

We expect the economy to contract sharply in Q3, with growth at -2.7% q/q, 3.0% y/y (forecast: -2.7%, 3.0%) due to the prolonged lockdowns in two of Australia biggest states (i.e., NSW and VIC). Based on RBA's Nov SoMP forecasts, the Bank sees Q3 GDP coming in at -2.2% q/q, +3.5% y/y. However, we think Q3 GDP is likely to be weaker than the Bank's expectations given a sharp plunge in consumption and lower fixed capital investments. 

How could it affect the AUD/USD?

AUD/USD holds on to the previous day’s rebound from a one-year low of around 0.7130 ahead of the key data release on Wednesday.

The consolidation in the market sentiment and mixed concerns over the covid strain could best be cited as the main catalysts for the pair’s latest corrective pullback.  On the latest basis, comments from China’s Vice Premier Liu He, expecting higher GDP growth for 2021, adds to the odds favoring recovery of the Aussie pair as it has dropped much since late October.

That said, today’s Aussie GDP is less likely to help the Reserve Bank of Australia (RBA) policymakers to make any key decision and hence may not help to forecast the AUD/USD prices much. However, a major positive surprise could offer a reason to the counter-trend traders as the quote struggles to drop below the yearly low.

While citing this, FXStreet’s Dhwani Mehta said, “Against the backdrop of the persistent covid worries, the reaction to the Australian GDP report could be limited, as broader market sentiment, yield dynamics and the influence of the greenback will continue to dominate the pair.”

Technically, AUD/USD holds onto corrective pullback from yearly low inside one-month-old bearish trend channel, taking rounds to an ascending trend line established since November 2020.

Although oversold RSI conditions triggered the much-awaited bounce, bearish MACD signals and downward sloping channel keeps sellers hopeful until the quote crosses the 0.7210 hurdle, including the stated channel’s upper line and 78.6% Fibonacci retracement (Fibo.) of November 2020 to February 2021 upside.

Key notes

Australian GDP Preview: September quarter contraction only a ‘setback’?

AUD/USD bears await for downside to resume again from 61.8% golden ratio

About the Aussie GDP release

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 a broad measure of 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.