AUD/USD steady after Bullock’s hawkish message

The Australian dollar has posted slight gains on Thursday. AUD/USD is trading at 0.6732 in the North American session, up 0.11% today at the time of writing.

Australia’s economy has been dubbed a “horror show” by some local commentators and yesterday’s weak GDP release only reinforced the pessimism about economic conditions. GDP rose a paltry 0.2% in the second quarter, unchanged for a third straight quarter and missing the market estimate of 0.2%.

The soft GDP report card didn’t change the mind of the Reserve Bank of Australia’s Governor Bullock, who said earlier today that the central bank would not be lowering rates anytime soon. Bullock reiterated her previous stance that if the economy performs as expected, the RBA “does not expect” to cut rates in the near term, which she defined as a six-month period.

Bullock continues trying to dampen hopes of rate cuts, but the markets are marching to a different tune and have priced in a rate cut before the end of the year. There is a significant dissonance between the RBA and the markets, but both would agree that the economic data will determine the central bank’s rate path.

The markets are eagerly awaiting the US nonfarm payrolls report on Friday, which is expected to rise to 160 thousand in August, after a disastrous slide to 114 thousand in July. This week’s employment data has been mixed. JOLTS job openings and the ADP employment report eased in August and missed expectations, although unemployment claims fell and were lower than the market estimate. The nonfarm payroll report could have a strong effect on the movement of the dollar and will be a significant factor as to the extent of the expected Fed rate cut.

AUD/USD Technical

• AUD/USD is testing support at 0.6720. Below, there is support at 0.6692
• 0.6755 and 0.6783 are the next resistance lines

Content 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 Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.