When is the Australia GDP release and how it may affect the AUD/USD pair?

Australia first quarter Gross Domestic Product (GDP), due at 01:30 GMT is expected to show a marked slowdown in the growth rate. The economy is seen expanding 0.2% quarter-on-quarter compared to the previous quarter’s growth rate of 1.1%. The annualised figure is seen cooling to 1.5% from 2.4%.

ANZ predicts lowest growth rate since 2009

The preview note from the ANZ research says, “The Q1 GDP could have risen 0.3% q/q. This continues the sawtooth pattern evident in GDP over the past year or so; and would see an annual growth dip to 1.6% y/y, which would be the lowest rate since 2009.”

For 103 quarters, Australia has avoided negative growth in real gross domestic product (GDP). The last negative print was seen in Q1 and Q2 of 1991. What it means is that Australia has not had a technical recession (two consecutive quarters of negative GDP) for 26 years.

Economists at ANZ believe Australia will once again avoid a negative GDP print., although there is widespread fear that the GDP may dip into the negative territory in the next quarter, due to the impact of Cyclone Debbie.

What to expect of AUD/USD?

The GDP data is often seen as a lagging indicator, revealing the state of the economy in the previous quarter. Hence, the markets usually do not move much on the GDP unless there is a big positive or negative surprise.

That Australian economy slowed sharply in the first quarter is not news anymore. The AUD may lose ground only if the GDP misses forecasts by a big margin or drops into the negative territory.

AUD/USD has been well bid over the last three trading days, courtesy of a sharp rally in gold prices and a drop in the treasury yields. The 10-year treasury yield fell below 200-DMA on Friday, which strengthened the offered tone around the US dollar. The currency pair currently trades above 0.75 handle. The stage looks set for a rally to 200-DMA of 0.7530 if the GDP prints above estimates.

AUD/USD Technicals

The daily chart shows a higher bottom formation and a bullish RSI. The immediate hurdle is noted at 0.7530 (200-DMA) followed by resistance at 0.7556 (100-DMA + May 2 high) and 0.7586 (Apr 24 high). On the downside, breach of support at 0.7485 (50-DMA) would shift risk in favor of a pull back to 0.7462 (5-DMA) and 0.7416 (May 30 low).