Australian dollar may rise after US GDP growth

  • Australian dollar rises after US GDP data improves
  • The mixed report opened the door to both hard and soft landings
  • AUD/USD could rise if Asia-Pacific stocks follow in the footsteps of the US

Asia-Pacific Market Summary – AUD/USD may rise after a more optimistic US session

The Australian dollar moved notably higher on Thursday after the U.S. GDP data was boosted on Wall Street. At the end of the session, the Dow Jones, S&P 500 and Nasdaq 100 rose 0.61%, 1.1% and 1.76%, respectively. This risk-based dynamic has reduced demand for haven assets, pushing the US Dollar lower.

In Q4 2022, the U.S. economy grew 2.9% from the previous quarter. This is higher than the consensus of 2.6%. However, private consumption — the largest growth segment — grew just 2.1 percent against an estimate of 2.9 percent. The details of the report suggest that the unexpected increase in headline rates is due to unstable components, such as inventory increases and government spending.

Overall, this is likely to paint an overall picture. The arguments that can be made here point towards hard and soft. This could keep the Federal Reserve on its current path with markets looking for a tightening cycle that will soon end in the next few months. The Australian dollar has also benefited from a surprisingly strong local inflation report earlier this week that raised bets of an RBA rate hike.

Entering the Asia-Pacific session on Friday, AUD/USD is tracking Australian PPI data for the fourth quarter. Elevated readings in line with the CPI report could lead the market to focus on a more hawkish RBA. Moreover, if traders extend the pink session on Wall Street in Asia, the Australian Dollar could continue to benefit.

Australian dollar technical analysis

On the daily chart, AUD/USD seems to be trading within the boundary of the bearish Bullish Wedge. Meanwhile, a Doji candlestick pattern appeared as the price tested the 8-month high. The latter is a sign of indisposition. If the price rejects the resistance level, a fall to the bottom of the wedge is possible. On the downside, the extension of gains indicates a May high of 0.7283.

Source: DailyFX


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