Today, there has been an intense battle for a bullish takeover of the AUD/USD pair during the Asian session. The bulls had battled to take the pair to higher levels following the positive results of the Australian quarterly Gross Domestic Product (GDP) released today. However, the bears have vehemently resisted the several attacks from the bulls. They are further backed up by a steadier US dollar. Notwithstanding the initial struggles, AUD/USD is currently bullish. In an effort to attract more buyers, the pair needs to break above its daily resistance at 0.71950. The next target once this is achieved is the strong resistance at 0.72590.
The Australian GDP report released today
The Australian GDP report is usually released quarterly (after 65 days intervals). The GDP data is a vital exchange rate factor that influences a country’s currency. A high GDP, for instance, shows significant progress has been made in productive activities, which creates strong demand for that country’s products. Similarly, an increase in the need for a country’s products and services creates a high demand for its currency across the globe. This is why AUD/USD has responded positively to this news initially.
According to the data released, Australia’s first quarter (Q1) Gross Domestic Product (GDP) increased by 0.8%, more than the expected target, which is 0.7%. The previous figure was 3.4%. Also, the country’s annualized GDP increased by 3.3% compared to the 3.0% YoY market consensus and 4.2% in previous printouts.
What are the factors drawing back AUDUSD from rising despite positive GDP data?
AUDUSD, judging from records, has performed poorly today despite the news of a positive GDP in the just-concluded quarter. Two significant reasons are keeping this pair back from the expected target.
- China’s zero-COVID policy: The strict lockdown policy imposed on millions of Chinese in Shanghai, Beijing, and the environment is essentially discounting further economic growth. Australian Treasurer Jim Chalmers had decried the effects of the prolonged lockdown on the country’s economy and called for a revival of total economic engagements to strengthen the currency.
- Strong dollar: The US dollar has always been the yardstick for measuring other currencies’ performance paired against it. The renewed dollar strength recently had held the AUDUSD down from achieving its immediate target.
