Australian Dollar Battered By Hefty Current Account Miss
- Australia’s first-quarter current-account deficit was much bigger than expected
- This does not bode well for Wednesday’s Gross Domestic Product release
- The Australian Dollar did not take the news well
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The Australian Dollar took a nasty knock Tuesday as current account data raised the specter of weaker official growth numbers.
The first-quarter current-account deficit was A$ 3.1 billion (US$2.3 billion). This was much worse than the expected A$0.5 billion shortfall which markets had expected. To make matter worse, net exports fell 0.7%, when a 0.4% slip was forecast. This was a bad miss and will drag on official Gross Domestic Product data for the same period, which will be released on Wednesday.
AUD/USD investors certainly seemed worried about it, and took the pair down quickly in the aftermath.
GDP is expecrted to rise 0.3% on the quarter and 1.6% on the year. Even if the result comes in as forecast it will represent a deceleration from the 1.1% and 2.4% rates seen, respectively, in the final quarter of 2016. Numbers such as the current account raise the chances of a miss.
The Reserve Bank of Australia will make its June monetary policy decision later at 04:30 GMT, with no moves expected. Futures-market pricing suggests that current, record low Australian interest rates will not rise this year, and indeed well into next, even if they fall no further either.
--- Written by David Cottle, DailyFX Research
Contact and follow David on Twitter: @DavidCottleFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.