Not A Great Morning for the Aussie

Posted Wednesday, December 7, 2016 by
Skerdian Meta • 2 min read

Last night I was awake when I saw the Aussie dive about 60 pips in a matter of minutes. We had an open EUR/USD signal so I thought it might be a wave of USD buying amid low liquidity. I just heard on the news that Iran was responding to Trump´s comments about abolishing the Iran nuclear deal which might have spurred a risk aversion rally in the safe haven currencies.

However, after checking the other pairs and the economic calendar, I saw that this nose dive came as a result of the disappointing Australian Q3 GDP report. Although last quarter was revised a point up, the miss in the third quarter was so massive that the Aussie couldn´t handle it. 

The GDP was expected to grow by 0.2% in the third quarter but instead, it shrank by 0.5%. To me, it doesn´t look right for a number of reasons; most of the developed economies in the world have been growing in the third quarter and even Japan escaped contraction last quarter. The Australian economy has been much more robust than the Japanese, so I just can´t see how it could contract by 0.5% in Q3. 

Second, the miss is so big that it looks like a mistake. I remember one or two years ago, the Australian unemployment rate fell nearly 1% in just a month, but it didn´t take long before realizing there was caveat somewhere in the system which distorted the numbers, so don´t take this Australian Q3 GDP numbers so seriously. At least, wait until they´re denied.

Nonetheless, the Australian Dollar is about 50 pips lower from where it was before the release last night and it is creeping higher. I see this as a good opportunity to get ready for a sell AUD/USD signal. Perhaps the best spot to open the forex signal will be below the 200 smooth moving average (200 SMA) on the hourly AUD/USD chart. 

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