Talking Points:
- Australian third quarter GDP growth came in at 0.6% on the quarter, 2.8% on the year
- These aren’t bad figures, but the markets had hoped for more
- The Aussie Dollar duly suffered
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The Australian Dollar took a fall Wednesday after official Gross Domestic Product figures for the year’s third quarter came in below expectations.
On the quarter, growth was 0.6%. That was below both the 0.7% expected and the previous quarter’s upwardly revised 0.9% gain. The annualised rise was 2.8%. This was well ahead of the second quarter’s 1.8% rise, but it was below the 3% expansion which markets had hoped for.
Still, overall the numbers aren’t too shabby, with that annualised gain Australia’s best performance since the second quarter of 2016. That said the markets had clearly hoped for more and AUD/USD’s immediate reaction underscored their disappointment.
The Australian economy presents its domestic policy makers with something of a conundrum at present. Its performance remains reasonably strong on many counts, notably job creation. However, consumers are indebted, the housing market is frothy and inflation looks stubbornly low.
On its daily chart AUD/USD remains in the downtrend channel which has endured since the pair hit its 2017 highs back in September. However, a two-week period of consolidation has seen the Aussie challenging the channel top, even if it has yet to conclusively break it.
Some strong domestic and Chinese data gave it a nudge this week, as did some Reserve Bank of Australia commentary which seemed to evince less concern about the weakness of inflation. It’s worth remembering though that the “USD” side of AUD/USD is likely to dominate in the days ahead.
The official US employment data release is coming up this week, to be followed by the last Federal Reserve monetary policy meeting of the year, which is expected to result in an interest rate rise.
--- Written by David Cottle, DailyFX Research
Contact and follow David on Twitter: @DavidCottleFX
