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Australian Dollar Jumps To One-Month Highs Following Upbeat GDP Data

Jun, 07th 03:44

The Australian dollar traded higher against its American counterpart in early Asia on Wednesday after first-quarter growth figures came out better-than-expected. Meanwhile, the greenback remained weak ahead of a big day on Thursday when the calendar features both highly-awaited political and economic events.

The currency pair AUDUSD added more than 0.4 percent in Asian morning session on Wednesday to trade around 0.75400 – the highest level since May 03rd. The pair also extended its upward rally to a fourth day in a row after the Aussie was boosted higher by upbeat economic data.

According to the Australian Bureau of Statistics, the country’s Gross Domestic Product (GDP) advanced by 0.3 percent in the three-month period to March in seasonally adjusted chain volume terms.

The growth rate in March quarter marked a sharply decline compared to the previous quarter, sending the annual pace of growth to the lowest level since late 2009. Indeed, year-on-year increase slowed to 1.7 percent – the weakest expansion rate since the third quarter of 2009.

Although the result was well below the 1.1% increase recorded in the first three months of the year, it beat analysts’ expectation calling for a rise of 0.2 percent.

Meanwhile, the dollar plunged to seven-month lows overnight as investors flocked into safe-haven assets ahead of a trio of risk events in the next 48 hours. On Thursday, the European Central Bank’s policy meeting, Britain’s general election and former FBI chief James Comey’s testimony before the Senate Intelligence Committee will draw market attention and drive market sentiment.

Comey’s testimony is expected to keep the U.S. dollar under pressure as the fired FBI director will testify about Russia’s alleged involvement in the U.S election as well as U.S. President Donald Trump’s alleged attempt to halt an investigation into former national security advisor Michael Flynn.

Fig: AUDUSD H4 Technical Chart

As can be seen from the price chart, the pair is testing a firm resistance at 0.75400 – the level it had to give up its up moves and reverse lower five weeks ago. After having breached a significant level at 38.2% Fibonacci level on Monday, the price action continue to cross over both the long-term and short-term MAs from below, suggesting a strong bullish momentum in the market. RSI and ADX indices are rising higher, signalling further advances. A resistance at 23.6% Fibonacci level is within the sight.

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