AU GDP beat fails to boost AUDUSD
Tony Sycamore September 1, 2021 4:45 AM
A reprieve for the Australian economy today as Q2 GDP beat expectations as strength in household and government spending outweighed a drop in export volumes and a run down in inventories.
Q2 GDP rose by 0.7% vs. market expectations of a 0.4% gain, arresting fears that the Australian economy would slip back into recession for the second time in two years, with a significant fall in Q3 GDP already guaranteed due to current lockdowns.
While today's positive number will prevent headlines and the deterioration in sentiment that negative economic headlines bring, the data also highlights a lost opportunity.
Following last year's reopen, the economy enjoyed its best run since the Global Financial Crisis thirteen years ago. An example of which Australia's unemployment rate dropped to 4.6% in July, the lowest level since 2008.
The momentum has now been lost, and it remains to be seen if the Q4 2021 reopening will acquire the same traction that followed the 2020 reopening. Notably, the current Australian household savings rate of 9.7% is half the 19.8% saving rate of June 2020, which helped unleash the pent-up demand wave at the start of this year.
Another feature of todays national accounts, Australia's terms of trade rose 7% in Q2, to its highest level in history. A supportive factor for the AUDUSD, as is the estimated A$19.7 bn of AUDUSD needing to be bought over the next month for dividend payments of Australian-based resource companies.
None of which has been able to shift the AUDUSD higher, contently trading near .7310c after failing to break horizontal resistance at .7320/40 overnight.
A break/daily close above .7320/40 would indicate another leg higher of the AUDUSDs corrective rebound towards .7420 is underway. Until then, dips are likely to find support at .7200c in coming sessions for the reasons outlined immediately above.
Source Tradingview. The figures stated areas of September 1st, 2021. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.