Where’s AUD/USD Heading After the RBA and GDP Figures?

AUD/USD had been in a bearish trend for over a month, starting from the middle of July. However, there was a reversal in this trend that lasted for two weeks after the pair fell below the 0.64 level, where it had found some support.

During this reversal, buyers attempted to push the price above the 20-day Simple Moving Average (SMA), represented by the gray line on the daily chart. While they managed to pierce the 20 SMA a couple of times, there were no closing prices above it. Additionally, the presence of two doji candlesticks, which are bearish reversing signals, suggests a lack of buyer momentum.

The recent price action culminated with Friday closing with a bearish candlestick, indicating that the bullish reversal was over. This week, the selloff escalated as the USD resumed the bullish trend while the sentiment for the AUD turned even more bearish after the further slowdown in China’s Caixin services shown in yesterday’s report. The Reserve Bank of Australia also helped in the 100 pip decline yesterday, as they kept the dovish stance, while earlier today we had the Q2 GDP report from Australia, which was expected to show a 0.3% increase.

Australian Q2 GDP Report

• Q2 GDP +0.4% vs +0.3% expected
• Q1 GDP was +0.2%
• GDP YoY +2.1% vs 1.8% expected
• Prior GDp YoY was 2.3%

The Chain Price Index inflation indicator is at -2.2% for the quarter. A better-than-expected result for the growth data ended June 30. It’s not all good news though, labour productivity fell in the Q2.

AUD/USD Live Chart