The AUD/USD held steady during the Asian session after the relatively strong Australia GDP data. The Australian dollar is trading at 0.7315, which is slightly below this week’s high of 0.7340.
Australia GDP data
The Australian economy avoided a double-dip recession in the second quarter as consumer and business spending did relatively well. According to the Australian Bureau of Statistics (ABS), the country’s economy expanded by 0.7% in the second quarter after rising by 1.8% in the previous quarter.
Are you looking for fast-news, hot-tips and market analysis?
Sign-up for the Invezz newsletter, today.
As a result, the economy expanded by 9.6% on a year-on-year basis. This growth was driven by a 1.2% increase in consumer spending and a 3.2% jump in capital expenditure. Government spending also rose in September.
The AUD/USD reacted mildly to these strong numbers because business conditions have changed significantly in the past few months. In the first two months of the third quarter, some key Australian states like New South Wales and Victoria have had some lockdowns as the number of cases rose. Therefore, there is a possibility that the second-quarter’s gains will become undone.
Indeed, some key leading numbers point to substantial weakness of the Australian economy. For example, data published earlier on showed that the manufacturing PMI declined to 51.6 in August. Another data by Markit revealed that the PMI declined to 52.0.
Similarly, data published on Tuesday showed that the country’s building approvals declined by 8.6% in July whole private house approvals fell by 5.8%. Private sector growth has also slowed.
Later today, the AUD/USD will react to the latest US manufacturing PMI data and ADP job estimates numbers. Analysts expect the ADP data to show that the economy added more than 613k jobs in August. Still, the impact of this number will be muted because it tends to have a big deviation from the official government figures.
The AUD/USD pair has been in a relatively tight range recently. On the hourly chart, it is trading at 0.7312, which is almost 3% above the lowest level in August. It has also moved above the 25-day moving average. Additionally, it has formed an ascending channel shown in purple. It is currently slightly below the upper side of this channel.
Therefore, the pair will likely remain in this range as trader wait for the latest official non-farm payroll numbers that will come out on Friday.
67% of retail CFD accounts lose money