- Summary:
- AUDUSD jumped on Australia's better-than-expected GDP report. However, the currency pair is struggling to sustain gains above 0.6600.
AUDUSD traded higher today following the better-than-expected GDP report from Australia. The currency pair rose from 0.6585 to its Asian session highs at 0.6614.Data for the last quarter of 2019 revealed that the economy grew by 0.5%. It beat expectations which only called for a 0.4% uptick. Meanwhile, the reading for Q3 2019 was upwardly revised from 0.4% to 0.6%. Looking at Australia’s growth rate on an annualized basis, it grew by 2.2% which also beat the 2.0% consensus. It also translates to the strongest pace of growth seen since Q3 2018.
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The report had an immediately bullish effect on AUDUSD. However, the Aussie struggled to extend its gains. This is because the data does not reflect the adverse effects of the coronavirus which seems to be the market’s focus now. Yesterday, the RBA and the Federal Reserve cut their interest rates in an effort to stimulate the global economy amid the virus’ spread.
AUDUSD Outlook
On the daily time frame, we can see that the recent rally on AUDUSD was enough to push price above the 0.6600 handle. The currency pair is now testing resistance at the falling trend line (from connecting the highs of December 31, January 16, and February 13). The psychological handle also coincides with the area between the 50% and 61.8% Fib levels when you draw the Fibonacci retracement tool from the high of February 12 to the low of February 28. Reversal candlesticks around this area could mean that AUDUSD would soon re-test its decade-lows at 0.6430.
Conversely, a close above yesterday’s high at 0.6644 could mean that a rally on AUDUSD would soon happen. The currency pair could soon trade higher and test its highs for early February around 0.6750.