AnalyticsTrade
New Member
Hey fellow traders,
I couldn't be more thrilled to share some exciting news with you today. Despite a soft GDP report and lackluster Chinese trade data, the Australian dollar is on a remarkable upswing, reaching a 1-month high against the US dollar. Currently trading at 0.6689, AUD/USD has surged by 0.28% and shows a remarkable 1.2% gain for the week.
Now, you might be wondering how this happened amidst disappointing economic indicators. Well, let's break it down. Australia's GDP growth has slowed to 0.2% in Q1 2023, falling short of expectations. It's evident that factors such as the cost of living crisis, rising interest rates, and weakened demand have contributed to this cooling trend. Furthermore, China's faltering reopening, as reflected in declining trade figures for May, poses challenges for Australian exporters, given China's significance as their largest market.
Interestingly, this GDP report coincided with the Reserve Bank of Australia's (RBA) announcement of a 25-basis point rate hike. The RBA's decision comes as no surprise, as they strive to combat stubborn inflation, currently standing at an alarming 7%. Governor Lowe has made it clear that the RBA remains committed to bringing inflation back within the 2-3% target range, which has necessitated the recent rate increases.
Looking ahead, it seems likely that the RBA will continue with its tightening measures, as core inflation remains more persistent than anticipated. While the cash rate is currently at 4.10%, there have been discussions around a potential peak at 4.8%. However, it's essential to balance this against the risks of a recession. Regardless, it's safe to say that we can anticipate further rate hikes on the horizon.
Now, let's turn our attention to the technical side of things. AUD/USD is currently testing resistance at 0.6677, and above that level, we have another hurdle at 0.6749. On the flip side, we have solid support at 0.6568 and 0.6496.
In conclusion, despite the temporary setbacks in the form of weak GDP figures and sluggish Chinese trade data, the Australian dollar has displayed remarkable resilience and continues to surge against the US dollar. The RBA's unwavering commitment to tackling inflation has instilled confidence in the market, driving the upward momentum of AUD/USD. As traders, let's embrace this positive momentum while keeping a close eye on upcoming rate decisions and economic developments.
Happy trading, and may the bullish trend continue!
