Australia’s Q1 GDP came in at 1.1% according to the Australian Bureau of Statistics. This reading beats economists’ forecasts around 0.9%, and is up from the 0.8% in the previous quarter. On the year prior to Q1, the economy grew 3.5%.
This is a welcoming sign for the Australian economy as the government now has some room for much needed budget cuts.
The better-than-expected GDP data helped the Aussie (AUD) gain against it’s continental rival, the Kiwi (NZD).
In the 1H chart, you see that AUD/NZD price had already been moving up prior to the GDP release. After a brief pause, the market reacted AUD-positively after the GDP data, and extended the breakout from a the recent consolidation pattern.
In the daily chart, you can see that the rally is part of a more significant bullish breakout from consolidation. AUD/NZD has been trading in a sideways market in 2014 roughly between 1.0491 and 1.0946. This consolidation, or base followed a downtrend since June 2012.
The GDP-reaction helps confirm the breakout above 1.0950 as well as the 200-day SMA.
At this point, a break below 1.08 will be needed to return the market toward the bearish outlook. The Daily RSI reflects overbought condition, we might still get some short-term pullback. The 1.09 area should provide support, but as just mentioned, 1.08 should at least hold up for the bullish outlook.
The current breakout opens up the 1.1195 level as the next target. This is the Sept. 2013 low and support pivot.
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