Australian GDP overview
Reserve Bank of Australia’s (RBA) optimism, despite the virus-led lockdowns and severe flooding in early 2022, highlights Australia’s first-quarter (Q1) Gross Domestic Product (GDP) figures, up for publishing at 01:30 GMT on Wednesday, for AUD/USD traders.
The recent data from Australia portray a mixed picture as downbeat Retail Sales and mixed employment report jostles with strong consumer inflation expectations. However, the economic outcome for Q1 2022 is likely to be an easy and one-off event considering the abnormal events that offered a shaky start to the year.
That said, forecasts suggest the annualized pace of economic growth to come in at 03.0%, below the previous period's 4.2%, while the quarter-on-quarter (QoQ) numbers could mark the 0.7% growth figures versus 3.4% prior.
Ahead of the outcome, Westpac said:
A softer print in activity is anticipated given the disruptions associated with omicron and severe flooding in NSW and Qld. Consumer spending and public demand are expected to add to growth, while business investment and housing should remain subdued. Westpac’s forecast of 0.6%qtr, 2.9%yr is close to the market median (0.7%qtr, 3.0%yr).
On the same line, FXStreet’s Dhwani Mehta said,
Even as Australia experiences a meager growth, it is unlikely to alter the RBA’s hawkish shift on the monetary policy stance. The country’s solid labor market, pent-up consumer demand and elevated household saving ratio continue to paint a rosy picture of the economy for this year.
How could it affect the AUD/USD?
AUD/USD consolidates the biggest daily loss in a fortnight around 0.7190 ahead of the key data release on Wednesday.
While the Aussie pair’s latest rebound could be linked to the mildly bid stock futures, as well as hopes of a positive surprise from the scheduled data, firmer US Treasury yields helped the US dollar to extend its previous rebound from the monthly low and challenge the AUD/USD bulls.
That said, Australia’s Q1 GDP is likely to carry less importance for the pair traders, considering the abnormal factors that may weigh on growth figures. Hence, the actual readings could offer a knee-jerk reaction to the data in case the outcome meets expectations or GDP drops further. On the contrary, a surprise positive may help the AUD/USD prices to extend recent recovery moves.
Technically, The AUD/USD pair’s pullback the previous day portrays a rising wedge bearish chart pattern on the four-hour play. The downside bias also gains support from the RSI (14) retreat. However, the 200-SMA offers an additional barrier to the south around 0.7120, in addition to the stated wedge’s support line near 0.7135.
On the flip side, recovery moves need to reject the wedge formation, by crossing the 0.7220 immediate hurdle, to convince short-term buyers.
Key notes
AUD/USD bulls are moving in again within bullish territory ahead of GDP
AUD/USD Price Analysis: Trades mixed below 0.7200 ahead of Aussie GDP, rising wedge eyed
AUD/USD Forecast: Bulls hesitate but don’t give up
Australian GDP Preview: A hit to economic activity ahead of next week’s RBA
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.
