Author: Sir Amar – Technical Analyst
Gross Domestic Product, published by the Australian Bureau of Statistics, is a measure of the total value of all goods and services produced by Australia. GDP is considered a broad measure of economic activity and health. An uptrend is considered positive for the AUD, while a downtrend is considered negative or bearish for the AUD. Surprisingly, the Australian dollar gave back early gains and fell after quarterly GDP came in at 0.8% in the fourth quarter versus 0.7% forecast and 3.4% previously.
Weaker activity development was expected given the disruptions related to Omicron and severe flooding in NSW and Queensland. Consumer spending and government demand should contribute to growth, while business investment and housing construction are likely to remain subdued. From a policy standpoint, analysts at ANZ Bank said: “The key figure in today’s Q1 GDP report will be the measure of average wage earnings.” As a result, annual GDP at the end of March was 3.3% instead of the forecast 3.0% and 4.2% previously. Shows upward revisions from previous quarters.
Of course, AUD/USD is subject to external factors. The bigger picture sees the Ukraine war, China’s zero case policy on Covid19 and the tightening of central bank timetables as the main issues the market is currently focusing on. The US dollar has appreciated in recent sessions as the prospect of a break in the Fed’s rate hike path in September has had some issues. Comments from Fed Governor Waller and Atlanta Fed President Bostic have suggested that inflation needs to move significantly lower for a pause to occur.