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AUD is Weakening Amid the Release of GDP Data

12/7/2022 1:35 PM

The AUD/USD pair continues to trade within the mid-term upward trend, but the current week began with a corrective decline to the area of the middle line of the Bollinger Bands (0.6700).

Currently, the pressure on the Australian currency is exerted by data on Australia's gross domestic product (GDP) in Q3 2022, which turned out to be weaker than experts expected: the economy slowed down from 0.9% to 0.6% in quarterly terms instead of the expected 0.7%, and grew by 5.9% in annual terms, but fell short before the forecast of 6.2%. This was due to a serious increase in inflation and an increase in the Reserve Bank of Australia (RBA) interest rate, which put pressure on the purchasing power of the population. Nevertheless, household spending is still significant, which makes it possible to maintain a stable state of the economy. Experts fear the situation will worsen, because now, due to the increase in prices, households are actively spending long-term savings (the savings ratio has adjusted from 8.3% to 6.9%) and as they deplete, they will have to reduce demand, which may lead to an economic downturn.    

The USD, on the contrary, has been strengthening since the beginning of the week, as investors fear the reaction of the US Fed to the latest economic statistics. Recall that the November data on employment and business activity in the non-manufacturing sector of the USA turned out to be strong, which showed that the current tightening of monetary policy is insufficient to weaken the economy. Under these conditions, officials may abandon the announced slowdown in the rate of adjustment of the value or increase its estimated peak of 5.0%. The situation is likely to clear up next week, when the US Fed holds its last meeting this year.

Technically, the price has fallen below the middle line of the Bollinger Bands and may continue moving towards 0.6590 (Murray [6/8]), 0.6525 (Fibo retracement 23.6%), 0.6347 (Murray [4/8]). The key level for the "bulls" is 0.6835 (Murray [8/8]), the breakout of which will give the prospect of growth to the area of 0.6958 (Murray [+1/8]), 0.7080 (Murray [+2/8], Fibo retracement 61.8%).

Technical indicators do not give a single signal: the Bollinger Bands are directed upwards, but the Stochastic has reversed downwards, and the MACD histogram is decreasing in the negative zone.      

Resistance levels: 0.6835, 0.6958, 0.7080. | Support levels: 0.6590, 0.6525, 0.6347.

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