In about an hour from now, the Australian Bureau of Statistics releases the GDP data for the 2nd quarter of 2021. Analysts are predicting a slower growth of 0.5% against the first-quarter growth of 1.8%. The consensus reflects the outlook for the Australian economy, which is expected to have taken a hit from renewed lockdowns and the slower growth of China, the country’s major trade partner.
Furthermore, commodity prices and their associated currencies are still smarting from the price-in effect of the market in response to the Fed’s decision to start tapering in late 2021. The Aussie Dollar has been a major casualty of this decision, losing nearly 800 pips in the last 3 months.
The currency pair of choice for trading this report is the AUD/USD. How will this pair fare?
Trade Outlook for AUD/USD
A reading which exceeds 1.0% will be a positive market surprise. If the GDP reading is 1.0% and above, the pair will get some fillip to aim for targets above 0.73382. These targets include 0.73724 and 0.74077. Only a break of 0.75141 will restore a bullish trend on the pair. However, this goal looks quite far-fetched at the moment.
On the flip side, a GDP reading which is lower than 0.5% or only marginally higher than that mark is likely to reinforce weakness on the pair. This weakness may manifest as a transient rise to 0.73382, from where rejection and additional selling could ensue. These rally-sells would target 0.72182 and 0.71471 initially, with 0.70657 coming into the picture if the decline is extensive.