As we get started with the 12/3 session, the Australian Bureau of Statistics released Q3 GDP data for Australia.
AUS GDP q/q (Q3): 0.3%
(click to enlarge; source: forexfactory.com)
Since the strong Q1 reading of 1.1%, Australia’s GDP growth rate has declined for a second quarter in a row, disappointing forecasts that called for a slight uptick. Instead, the GDP rose at a lowly clip of 0.3%, the lowest since Q1 of 2011 when there was a contraction.
The slide in growth is going to make the RBA consider a rate cut pending further evidence that the economy is failing to pick up even as the Australian Dollar declines, helping make exports more competitive. The continuing fall in commodity prices is also a drag on the economy, so a stabilization and rebound of comm prices should help the RBA avoid a rate cut.
The disappointing GDP data not surprisingly put pressure on the Aussie.
The AUD/USD was already retreating and showing bearish continuation signs after the RBA monetary policy statement, which reiterated what was said in previous statements. The decline in GDP growth suggests the RBA might have a more dovish tone in the next monetary policy statement. Thus, the AUD/USD is breaking below 0.84 into fresh lows on the year. It looks like AUD/USD is poised to fall toward the 2010 lows near 80.65.
AUD/NZD has also been sliding sharply, showing that the decline in AUD/USD was not just a USD-story, but also a AUD-story, a double whammy.
We saw a slight correction to start this week, but after the GDP data, price has held below 1.0850 and looks poised to threaten the current low on the month near 1.0760. To the downside, there is a common low around 1.0650. Then below the July-low of 1.0618, we have the 1.05-1.0550 lows on the year in sight.
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