Talking Points:
- Australian GDP for 2Q was slightly below the expected pace at 0.5% quarterly growth versus 0.6% expected
- Following the uneven Aussie Dollar climb following the RBA decision to hold rates, conviction faltered
- Swaps market continues to price in one further rate cut from the central bank over the coming year
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Watch the recording of John Kicklighter's coverage of second quarter Australian GDP release and the Australian Dollar's reaction to the news. The data came across the wires generally 'in-line' with expectations. The 0.5 percent quarterly expansion was slightly off the 0.6 percent pace predicted by economists while the year-over-year figure met the four-year high 3.3 percent clip projected. The first blush response by speculators was bearish but the knee jerk reaction generated limited conviction in growth and monetary policy forecasts so in turn proved limited as an Ausssie Dollar driver.
Looking more closely at the underlying data, the picture of Australian health is dubious which mars the publicity the country is receiving owing to its run for one of the longest recession-free periods for a developed country on record. Distant and wide scenario array assessments are not particularly market moving in today's markets however. To drive the Aussie, Euro, Yen or Dollar; a distinct catalyst for a preconceived interpretation of monetary policy bearing is necessary. Eventually, this data will define the course of the next RBA move; but for now, stronger currents are pulling at the currency.
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