AUD/USD Eyes February High After Australian Q4 GDP Beat
Australian Dollar, AUD/USD, GDP – Talking Points
- Q4 GDP comes in at -1.1% YoY against an expectation of -1.8%
- AUD/USD cautiously higher after the release, pushing towards 0.784
- The Australian economy looks set to rebound swiftly from the COVID induced recession
The Australian Dollar climbed after Australian Q4 GDP came in at -1.1% year-over-year (YoY), against an expected reading of -1.8%. The strong beat, coupled with a 3.1% (QoQ) growth rate, compounded recent Aussie strength as the outperformance of the economy attracted more AUD/USD bulls.
Australia remains on a steady path in terms of economic recovery, as forecasts continue to improve due to faster vaccine rollouts. A strong labor market, rising wages, and rising private capital expenditure (Capex) data painted a rosy picture for the economy moving forward this year. The bounce in private capital expenditures reflects growing local optimism, and as a result, the trend has provided upward pressure to the Australian Dollar.
Australian Private Capital Expenditure Data
Rising iron ore and copper prices have also added to Aussie-related optimism, as a “commodities supercycle” has helped elevate AUD/USD to levels not seen since March 2018. Despite selling off sharply at the end of February, AUD/USD rebounded as market participants regained optimism in the pair. China, Australia’s largest trading partner, also remains on course for a swift economic recovery, adding to a growing list of tailwinds for the Australian economy.
AUD/USD 3 Hour Chart
Chart Courtesy of IG
During the Reserve Bank of Australia’s (RBAs) March 3rd policy meeting, officials maintained the Official Cash Rate and 3-Year Yield Target at 0.10%. RBA officials also added that the bank would be willing to adjust bond purchases to respond to changing market conditions. That was in response to the recent surge in global government bond yields. Despite the willingness of the RBA to remain highly accommodative, Governor Philip Lowe highlighted the strength of the ongoing recovery, stating that it is “well underway” and “stronger-than-expected.” For more on RBA policy, please click here.
--- Written by Brendan Fagan, Intern for DailyFX
To contact Brendan, use the comments section below or @BrendanFaganFX on Twitter
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.