- AUD/USD falls after encouraging US data amid risk environment.
- The dollar was buoyed by GDP data and jobless claims, although durable orders missed estimates.
- Australia’s third quarter CPI justifies next week’s Reserve Bank of Australia (RBA) rate hike.
The AUD/USD fell below 0.6500 from weekly highs around 0.6521 on news that the US economy grew faster than estimated, ending a “technical recession” after two consecutive quarters of negative Gross Domestic Product (GDP) readings. Therefore, the US dollar was strengthened, as evidenced by AUD/USD falling towards 0.6470, down 0.37%, at the time of writing.
The preliminary reading of the GDP of the 3rd. quarter exceeded estimates
The Australian dollar lost steam as the US Bureau of Economic Analysis (BEA) reported that preliminary third-quarter GDP rose 2.6%, beating estimates of 2.4%. Factors such as the reduction of the trade deficit in the third quarter added 2.77% to the increase in GDP. The same report reported that consumer spending is slowing down from 2% in the second quarter to 1.4%.
Separately, the US Department of Labor revealed initial jobless claims for the week ending October 22, which increased by 217,000, down from the 220,000 forecast, though slightly up from the week. previous. Durable Goods Orders offset this, missing estimates, rising just 0.4%, below the 0.6%m/m expected.
The Dollar Index, a gauge of the USD’s value against a basket of peers, rose 0.53% to 110.277, while US Treasury yields fell. The 10-year US bond yield fell 6.5 points to 3,943%, weighed down by speculation about a Fed reversal.
Aside from this, Wednesday’s Australian inflation report fueled speculation of a further rate hike from the Reserve Bank of Australia (RBA). Third quarter inflation rose 7.3% yoy, while the RBA’s favorite inflation gauge, the basic trimmed mean, rose 6.1% yoy. According to Westpac analysts, “Rate Markets continued to place a high probability on the RBA raising the cash rate 25bp next week, but yields increased for later dates, such as the May 2023 contract, rising from 3, 88% to 3.95% and above 3% in mid-2023” So the next RBA meeting
AUD/USD Key Technical Levels
Source: Fx Street
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