Australian Dollar, AUD/USD, AU GDP, RBA, Commodities – Talking Points
- Australian Q2 GDP delivered an upside surprise despite NSW lockdown
- The ASX 200 was soft going into GDP but steadied afterwards
- The focus will move to the RBA next Tuesday.Will AUDhold recent gains?
AUD/USD found some footing after Australian GDP came in at 0.7% q/q for the 2nd quarter against expectations of 0.4%, according to a Bloomberg survey. Annual GDP had some upward revisions and printed at 9.6% against 9.1% expected.
The market was surprised by the solid result as the second quarter GDP number was impacted by early Covid-19 Delta variant lockdowns. The largest economy of New South Wales (NSW) was in lockdown in June, but other states were yet to do so. The full impact of other lockdowns, particularly the additional Victorian ones, will not be fully exposed until the 3rd quarter data. The Q3 GDP will also be dependent on the easing of these restrictions as vaccinations rates are expected to move above the targeted 70% in October in some states.
The S&P/ASX 200 moved slightly higher in response to the data, as the market interpreted the implications of lockdowns against the profit reporting season. Current estimates are for a record of over AUD 34 billion being paid in dividends this reporting season as well as large share buy-backs being announced.
AUD/USD turned a bid which went against the grain of iron ore prices as the commodity resumed a move lower after Chinese PMI data disappointed yesterday.
AUD/USD AND IRON ORE PRICES
AUD/USD NEAR-TERM MOVE REMAINS IN UPTREND
On the hourly chart, there is upward trajectory in a channel that remains intact. The most recent previous high is the next likely resistance level at 0.7341, then the more significant resistance point may be at 0.7426. On the downside, near-term support comes in at 0.7281, followed by 0.7218 before reaching the year low of 0.7103.
Looking ahead, Australian trade data is due on Thursday. The RBA meeting next week is unlikely to see a change in monetary policy given the ongoing lockdowns in the New South Wales and Victoria region.
— Written by Daniel McCarthy, Strategist for DailyFX.com
To contact Daniel, use the comments section below or @DanMcCathyFX on Twitter