Aussie tumbles on GDP miss


AUD/USD at two-month low

The Australian economy did not perform as well as expected in the fourth quarter, expanding 2.3% from a year earlier, a marked slowdown from Q3’s revised +2.7% and below economists’ more optimistic forecast of a 2.5% gain. The Australian statistics agency commented that the subdued growth reflected soft household spending and a decline in dwelling investment. Note the central bank had been worried about housing bubbles for a while now. Maybe they can move it off the agenda now.

The data miss pushed AUD/USD down immediately to its lowest since January 4 and subsequently fell to an intra-day low of 0.7029. The FX pair may possibly have its eye on support at the 50% retracement level of January’s rise at 0.7010. The 55-day moving average is sitting at 0.7131, and could be the closest resistance point.


AUD/USD Daily Chart

Source: OANDA fxTrade


Market starts to price in earlier RBA cuts

Australia’s interest rate markets have started to price in higher chances of an earlier RBA rate cut, as the number of research notes calling for cuts this year increases. The probability of a cut in June has moved above 50% after today’s data. It was at 46% yesterday and only 23% at the start of the month, according to Bloomberg calculations. Since the start of the month AUD/USD has fallen 0.8%.


Japan trade friction next?

The US has stated that any free trade agreement with Japan would require a clause on currencies to be inserted, similar to the one included in the recent agreement with Mexico and Canada. Japan has argued that the link between the yen and the country’s exports has broken down since the global financial crisis, noting that the central bank has not intervened in currency markets for many years.

Recall the Trump labelled Japan a currency manipulator, though the US Treasury report from October 2018 stated that Japan only fulfilled two of the three requirements. However, it noted that Japan had met two of the three criteria in every report since April 2016.

Negotiations for the US-Japan trade agreement are scheduled to start soon, though an exact date has yet to be fixed. USD/JPY shrugged off the developments, holding below the 112 level at 111.81.


USD/JPY Daily Chart

Source: Oanda fxTrade


Slow data day

It’s a slow data day for the middle of the week before we head into a busier second half. We have speeches from Bank of England’s Cunliffe and Saunders followed by the Fed’s Williams. On the data front, there’s nothing to excite Europe while in the US session we get to see the ADP employment change for February (jobs growth seen slowing to 189k from 213k) and the US trade balance for December. The deficit is expected to widen to $57.0 billion, which would be the largest since January 2018, from $49.3 billion in November.


The full MarketPulse data calendar can be viewed at


Markets continue hitting the snooze button



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Andrew Robinson

Andrew Robinson

Senior Market Analyst at MarketPulse
A seasoned professional with more than 30 years’ experience in foreign exchange, interest rates and commodities, Andrew Robinson is a senior market analyst with OANDA, responsible for providing timely and relevant market commentary and live market analysis throughout the Asia-Pacific region. Having previously worked in Europe, since moving to Singapore he worked with several leading institutions including Bloomberg, Saxo Capital Markets and Informa Global Markets, proving FX strategies based on a combination of technical and fundamental analysis as well as market flow information. Andrew began his career as an FX dealer with NatWest and the Royal Bank of Scotland in the UK.
Andrew Robinson

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