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Australian GDP Figures Readjust RBA Policy Bets

Australian GDP Figures Readjust RBA Policy Bets

Nathalie Huynh, Bradley Kearns,

Talking Points:

  • AUD/USD showed a lukewarm response to the positive Australian GDP print
  • Australia’s economy grew 2.5 percent in the third quarter versus the 2.4 percent estimate
  • An increase in front-end yields reflects traders’ speculation that the RBA is less likely to ease near-term

Macroeconomic events affect currency valuations. Stay updated with major releases on our calendar.

The Aussie Dollar offered a tepid move to the upside as third quarter Australian GDP data beat the markets’ consensus forecast of 2.4 percent growth (YoY). The gauge of economic health showed a print of 2.5 percent which was further better than the previous quarter’s revised growth rate of 1.9 percent. The quarter-over-quarter figure surpassed expectations as well with a showing of 0.9 percent as opposed to the 0.8 percent estimate and the 0.3 percent revised previous reading.

The yield on Australia’s two-year government bond increased on the data which may reflect the markets’ speculation that the RBA is less likely to deliver further easing in the imminent future. In the central bank’s policy statement released earlier this week, it noted that interest rate decisions will be contingent on economic news flow. The door for additional accommodative policy was left open if data proved disappointing.

Recent flow of strong domestic data which contribute to the GDP figure led economists to revise their forecasts higher. Yesterday’s net exports of GDP came out at a strong 1.5 percent, exceeding 1.2 percent forecasted and -0.6 percent prior with a lift in both resource and services sectors. This key driver of quarterly growth was widely thought to add around 1.5 percent to GDP.

Components that may potentially drag on future GDP figures include: contractions in domestic demand and private capital, slowdown in public spending and consumption growth. All these data and subsequent GDP formation will be taken into consideration at the next meeting of the Reserve Bank of Australia on February 2nd 2016.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.