AUD/USD Capped by 0.7730 Hurdle; RSI Diverges Ahead Australia GDP

Australia GDP to Rebound Following First Contraction Since 2011.

Annualized Growth Rate to Recover From Lowest Reading Since 2009.

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Trading a News: Australia Gross Domestic Product (GDP)

Australia’s 4Q Gross Domestic Product (GDP) news might fuel a near-term miscarry in AUD/USD as a enlargement rate is projected to boost 0.7% after constrictive 0.5% during a final three-months of 2016.

What’s Expected:

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Why Is This Event Important:

A suggestive enlargement in mercantile activity might worsen a seductiveness of a Australian dollar and inspire a Reserve Bank of Australia (RBA) to adopt a some-more upbeat tinge during a subsequent process assembly on Mar 7 as ‘a lapse to reasonable enlargement is approaching in a Dec quarter.’ With that said, Governor Philip Lowe and Co. might uncover a larger eagerness to gradually pierce divided from a easing-cycle, yet a executive bank appears to be in no rush to lift a executive money rate from a record-low as ‘the arise in underlying acceleration approaching to be a bit some-more gradual.’ In turn, it seems as yet a RBA bar stays high for a executive bank to desert a wait-and-see approach, and a cabinet might demeanour to harden a written involvement on a internal banking as ‘an appreciating sell rate would mystify this adjustment.

Expectations: Bullish Argument/Scenario

The record trade surplus interconnected with a ongoing enlargement in a labor marketplace might beget a suggestive pickup in a enlargement rate, and a better-than-forecast GDP news might pull a aussie-dollar behind towards a monthly high (0.7741) as it boosts interest-rate expectation.

Risk: Bearish Argument/Scenario

However, resigned salary enlargement accompanied by a slack in building activity might continue furnish headwinds for a economy, and a gloomy GDP imitation might hint a bearish greeting in a Australia dollar as it puts vigour on a RBA to serve embark on a easing-cycle.

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How To Trade This Event Risk(Video)

Bullish AUD Trade: 4Q GDP Rebounds 0.7% or Greater

  • Need a green, five-minute candle following a recover to preference a prolonged AUD/USD trade.
  • If marketplace greeting favors a prolonged aussie trade, buy AUD/USD with dual apart lots.
  • Set stop during a near-by pitch low/reasonable stretch from entry; demeanour for during slightest 1:1 risk-to-reward.
  • Move stop to breakeven on remaining position once initial aim is met, set reasonable limit.

Bearish AUD Trade: Australia Growth Report Disappoints

  • Need red, five-minute candle to cruise a brief aussie position.
  • Carry out a same setup as a bullish AUD trade, only in reverse.

If you’re looking for trade ideas, check out a Trading Guides.

Potential Price Targets For The Release

AUD/USD Daily

AUD/USD Daily Chart

Chart – Created Using Trading View

  • Failure to exam a Nov high (0.7778) raises a risk for a near-term improvement in AUD/USD generally as a span struggles to pull above a 0.7730 (61.8% retracement) hurdle, while a Relative Strength Index (RSI) deviates with price; in turn, a span might continue to face range-bound conditions forward of a RBA’s subsequent seductiveness rate preference on Mar 7, yet a break/close next 0.7650 (38.2% retracement) might open adult a downside targets as a span continues to work within a 2016 range.
  • Interim Resistance: 0.7730 (61.8% retracement) to 0.7770 (61.8% expansion)
  • Interim Support: 0.7150 (161.8% expansion) to 0.7180 (61.8% retracement)

Impact the Australia GDP news has had on AUD/USD during a previous quarter

3Q 2016 Australia Employment

AUD/USD 10-Minute

AUD/USD Chart

Australia’s 3Q Gross Domestic Product (GDP) news showed a 0.5% decrease in a enlargement rate, with a economy posting a initial contraction given 2011. The annualized reading slowed to 1.8% from 3.1% in a second-quarter to symbol a lowest reading given 2009, with a slack mostly led by a decrease in business investment, while private expenditure increasing 0.2% during a same duration after expanding 0.6% during a three-months by June. The Australian dollar dipped next a 0.7450 segment following a larger-than-expected contraction in a enlargement rate, yet a marketplace greeting was short-lived, with a span finale a day during 0.7481.

Read More:

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Technical Weekly: USD/JPY – Just a Dip?

Gold Prices Mar into Fresh 2017 Highs- Fed Outlook in Focus

— Written by David Song, Currency Analyst

To hit David, e-mail dsong@dailyfx.com. Follow me on Twitter during @DavidJSong.

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