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AUD/USD Surged after Strong Australian GDP Alters Dovish RBA Policy Bets

AUD/USD Surged after Strong Australian GDP Alters Dovish RBA Policy Bets

Bradley Kearns, Contributor

Talking Points:

  • Australian Dollar gained after 4Q GDP figures beat economists’ estimates
  • GDP grew 0.6 percent in 4Q vs 0.4 percent anticipated and 1.1 percent the previous quarter
  • Two-year bond yields rallied, hinting at markets’ readjustment of RBA policy bets

See how retail traders are positioned in the majors with the DailyFX SSI.

The AUD/USD surged after Australia’s fourth quarter GDP data beat economists’ forecasts. The headline year-on-year print was 3 percent versus the 2.5 percent estimate. This was the fastest pace of expansion since March 2014. The quarterly figure crossed the wires at 0.6 percent. Analysts’ were expecting a showing of 0.4 percent. Both the yearly and quarterly previous statistics were revised higher to 2.7 percent and 1.1 percent respectively.

Australian front-end bond yields rallied alongside the local currency, indicating the news-flow may be softening near-term RBA dovish policy bets. In the central bank’s March 1 rate decision Tuesday morning, it noted that there are prospects for continued growth and that low inflation would provide scope for further easing. The better-than-expected GDP print may hint that the economy is trending in the right direction with positive inflation benefits or a strong enough economic pace to counteract price concerns.

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