AUDUSD – bumpy ride in Asia after weaker than expected GDP and upbeat RBA Governor Lowe
The Australian dollar was in hectic mode in Asia on Wednesday, driven by news and data. The pair fell to 0.7771 in early Asian trading, hit by weaker than expected Australia’s Q4 GDP data (q/q 0.4% vs 0.5% f/c and 0.7% in Q3) (y/y 2.4% vs 2.5% and 2.9% in Q3) signaled slower than expected growth.
The dip retraced the largest part of Tuesday’s strong rally and was contained by broken 100SMA, former strong barrier, now reverted to support, ahead of fresh rally.
The Aussie was inflated by remarks from the Governor of Australian central bank Lowe, who was upbeat about Australia’s economic growth despite weaker numbers at the end of the year.
Lowe also talked about possible global trade war, describing the decision on imposing tariffs as highly regrettable.
The Aussie received fresh boost from Lowe’s positive stance and bounced back above 0.78 barrier, coming closer to the Asian session high at 0.7828.
Despite overnight’s dip, the pair maintains positive tone in early European trading and probes again through daily cloud base (0.7817), which was broken on Tuesday’s strong rally and close within the cloud.
Tuesday’s long bullish candle continues to underpin, after strong bullish signal was generated on break above former key barriers, provided by 100 and 200SMA’s.
However, bulls need further confirmation on firm penetration of cloud base and lift above 0.7824/34 pivots (Fibo 61.8% of 0.7893/0.7712 fall and 20SMA) to signal further recovery as momentum studies remain weak and keep the downside vulnerable.
Weaker dollar on resignation of Trump’s advisor Cohn and concerns about the impact of global trade war could help bulls, as markets are focusing on US jobs data on Friday which are expected to provide fresh signals.
Res: 0.7817; 0.7834; 0.7868; 0.7893
Sup: 0.7802; 0.7787; 0.7771; 0.7756