The Australia GDP report for the 3rd quarter of 2019 is scheduled for release at 12.30am GMT on Wednesday morning. The consensus is for Australia’s economy to have remained static at 0.5% growth rate on a quarterly basis, with an annualized growth figure of slightly less than 1.9%. This report is coming after the Reserve Bank of Australia held rates at 0.75%, sending the AUDUSD into a small rally.
The Australian economy has only registered an annual growth of 1.4% in the middle of 2019, which is more than a 50% drop from the 3.1% Australia GDP figure during the same period in 2018. This figure, which is at 10-year lows, also reflects weakness in the housing sector, which has seen a tightening of the lending in that industry. Unemployment is rising, and wage growth is experiencing major headwinds, which has also had the multiplier effect of limiting consumer spending. Domestic demand is also forecast to remain weak.
The figures presented in the Australia GDP data set to be released in a few hours will play a huge role in determining if the RBA would commence 2020 with further easing of interest rates or not.
Outlook for AUDUSD
The currency pair of choice to trade the report would be the AUDUSD. The previous and the market consensus figures are the same: 0.5%. Therefore, the tradable deviation will be 0.0%.
A quarterly Australia GDP figure of 0.6% and above would be considered good for the AUDUSD, while a reading of 0.4% or less would be considered AUD-negative, which could drag down the AUDUSD. Traders would also want to look at the figures behind the main figure. What they find could determine how aggressively or conservatively the positions on the AUDUSD would be setup.
In what is proving to be a busy week for the Aussie Dollar, the Retail Sales report would hit the newswires on Thursday, and this could provide further volatility on the pair.
The nearest upside targets remain 0.68615 (immediate resistance formed by previous highs at September 26 and October 23), followed by 0.6916 (low of July 9 and high of November 4) as well as July 3 high of 0.70268.
On the flip side, an AUD-negative GDP reading could flip the asset back towards 0.6749 and 0.66742, if markets decide to use the prevailing risk-off sentiment to push back on the commodity-backed currency pair.