Australian dollar higher on solid data

The Australian dollar is showing some jump. AUD/USD has punched above the 0.72 level today and has posted gains of 0.59%, as it trades close to 1-month highs.

Australian releases were positive, giving the Aussie a strong boost. The trade surplus widened to AUD 10.49 billion in April, up from 9.31 billion in March (AUD 9.300 billion exp.). Exports were up 1.0% and commodity prices remained strong, with a gain of 30.4%. Retail sales dipped to 0.9%, but this matched the forecast.

GDP slows but better than expected

Australia’s Q1 GDP slowed to 0.8% QoQ, after a massive 3.6% QoQ gain in Q4 of 2021. Investors were not expecting a Q4 repeat, and the first quarter reading actually outperformed, beating the estimate of 0.5%.

The whipsaw movement in GDP makes it difficult to predict the underlying strength of the economy. For the RBA, the fact that the economy is still growing means that it can continue with its rate-tightening plans. Monetary policy has not focused all that much on GDP, with the RBA concentrating on the labour market, wage growth and inflation. The RBA holds its meeting next week, and is likely to tighten by another 25-bps, which would bring the cash rate to a (still low) 0.60%. The markets are expecting the cash rate to rise as high as 3.95%, which means that the RBA plans to continue tightening into 2023.

Recent US numbers have been mostly positive, which points to a strong US economy. The week wraps up with the US nonfarm payroll release on Friday. The markets are braced for a slowdown, as the April forecast stands at 325 thousand, after a March gain of 428 thousand. With the markets keeping a close eye on surging energy and food prices and the war in Ukraine, NFP isn’t the only game in town. Still, it is one of the most important economic releases and should be treated as a market-mover.

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AUD/USD Technical

  • AUD/USD is testing resistance at 0.7207. Above, there is resistance at 0.7252
  • There is support at 0.7121 and 0.7076

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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