AUD Rebounds on Strong GDP

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AUD Rebounds on Strong GDP

The Australian dollar and a few higher yielding currencies recovered today on the heels of improved risk sentiment and a strong Australian GDP. Risk sentiment also improved as the lack of bad news from Ukraine was treated as good news by most market participants.

AUD/USD bounced close to the .9000 major psychological resistance after the release of the gross domestic product, which revealed that the Australian economy grew by 0.8% in the last quarter of 2013. This was better than the estimated 0.7% growth figure, bringing the annual growth of the country to 2.8% for the past year.

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Economic Reports to Watch

Further gains for higher-yielding currencies, including the euro and the pound, are expected in the upcoming trading sessions if risk appetite stays in the markets. Up for release are the Spanish and Italian services PMIs (purchasing managers’ index), as well as the final services PMI reading for the euro region. Small improvements are expected for the region’s third and fourth largest economies and stronger than expected results could boost EUR/USD back to the 1.3800 resistance levels.

Also due today is the U.K. services PMI, which is expected to post a small decline for February. Analysts project the reading will drop from 58.3 to 58.0 for the month, reflecting a weaker expansion in the industry. If that’s the case, pound pairs might be in for more losses in the London trading session.

Later in the US session, the ADP non-farm employment change is up for release. This could show a rebound in hiring, which should be positive for overall risk sentiment and US equities. However, expectations are only at 159K, lower compared to the previous 175K reading. A weaker than expected report might set the tone for this week’s US non-farm payrolls release, which could reflect more weakness if extreme weather conditions still took a toll on the jobs sector.

To contact the reporter of the story: Jonathan Millet at jonathanmillet@forexminute.com