Australian GDP overview
Baffled by the pandemic-led local lockdowns and the Reserve Bank of Australia’s (RBA) refrain from rate-hikes, not to forget the latest geopolitical woes emanating from Ukraine, AUD/USD traders gear up for Australia’s fourth-quarter (Q4) Gross Domestic Product (GDP) figures, up for publishing at 00:30 GMT on Wednesday.
The recent data from Australia have been mixed but upbeat consumer spending and public demand figures keep buyers cautiously optimistic about the economic growth.
Forecasts suggest the annualized pace of economic growth to come in at +3.7%, below the previous period's +3.9%, while the quarter-on-quarter (QoQ) numbers could mark the 3.0% figures versus -1.9% prior.
Ahead of the outcome, Westpac said:
A rebound in activity is anticipated with the easing of restrictions seeing improvement in economic conditions. Support from consumer spending and public demand is expected to be offset slightly by weakness in the home building; uncertainty around consumption in services is present. Westpac’s forecast of 3.3% is broadly in line with the market median.
How could it affect the AUD/USD?
AUD/USD pares the previous day’s losses while picking up bids around 0.7260 ahead of the key data release on Wednesday.
The consolidation in the market sentiment and mixed concerns over the geopolitics, not to forget Fed’s next move, allow markets to take the risk on the AUD/USD. Also likely to favor AUD/USD bulls are the recently upbeat consumption and jobs data from Australia, which in turn suggests the firmer Aussie GDP figures. However, the output itself won’t welcome the bulls amid fears of inflation and geopolitics.
Hence, the anticipated easing in GDP may not deter the AUD/USD bulls should the downbeat US Treasury yields weigh on the pair prices. The reason could be linked to the market’s higher emphasis on the geopolitics of late.
Technically, the AUD/USD pair’s ability to provide a daily closing beyond the 100-DMA level of 0.7235 enables it to challenge January’s high of 0.7315.
Key notes
AUD/USD holds on fragile grounds as bulls attempt to pull away from the beta of stocks
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.