Australian Dollar Sinks on Disappointing GDP, Chinese PMI Data
- Australian GDP Grew 2.3% y/y in 3Q vs. 2.6% Expected, 2.4% Prior.
- HSBC Chinese Services PMI Fell to 52.5 in November from 52.6in October
- Australian Dollar Fell as Soft Economic Data Drove RBA Rate Cut Bets
AUD/USD sank after Australia reported Gross Domestic Product grew 2.3% year-on-year in the third quarter, below 2.6% expected and 2.4% in the prior period (revised lower from 2.6% originally reported). The Aussie slid from 0.9131 to 0.9067, a 60 pip drop in just minutes. Similar price action was observed elsewhere: AUD/JPY fell from 93.63 to 92.96 and AUD/CAD edged down from 0.9717 to 0.9650.
The worse-than-expected GDP data indicates a slowdown in Australian economic growth, which may suggests that RBA will restart interest rate cuts. Prior to today’s data,the RBA left its benchmark interest rate unchanged at a record low 2.50 percent but Governor Glenn Stevens said the central bank will “adjust policy as needed to foster sustainable growth.”Meanwhile, Australian Treasurer Joe Hockey said the economy is stuck in second gear.
Separately, HSBC reported its Chinese Services PMIgauge came in at52.5 in November, down from 52.6 recorded in October. The result points to a slowdown in service-sector activity. China is Australia’s top export market, so decline in economic growth there may hurt Australian performance and reinforce the case for additional RBA stimulus.
Data at a Glance
- Australia GDP SA QoQ: 0.6% vs. 0.7% Expected, from 0.7%Prior (revised higher from 0.6%).
- Australia GDP YoY: 2.3% vs. 2.6% Expected, from 2.4%Prior(revised lower from 2.6%).
- HSBC MarkitManufacturingPMI:52.5 in November, from50.6in October.
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AUD/USD 5-minute Chart: December 3, 2013
5-Minute Chart - Created Using FXCM Marketscope 2.0
-- Written by Cheng Li, DailyFX Research. Feedback can be sent to email@example.com
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.