Australian Dollar saw milds gains as markets digest US data
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Patricio Martín
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30 Jan @ 08:46 (GMT+0)

Australian Dollar saw milds gains as markets digest US data

  • Pair sees some upside around 0.6235, maintaining a tight range after key US data.
  • Fed holds rates but adopts a more cautious stance on inflation progress.
  • US GDP and jobless claims offer mixed signals, pressuring the US Dollar.
  • RBA is expected to pivot toward policy easing next month as inflation cools.

AUD/USD remains range-bound above 0.6200 on Thursday as markets assess the United States (US) fourth-quarter GDP release, which could shape the Federal Reserve's (Fed) rate outlook. Despite holding rates at 4.25%-4.50%, the Fed’s latest statement signaled a more cautious approach toward inflation, fueling doubts over the timeline for rate cuts. On the other hand, markets are confident that the Reserve Bank of Australia (RBA) will deliver a rate cut in February.

Daily digest market movers: Aussie mildly soft after US data

  • US GDP disappointed as the preliminary Q4 GDP figure slowed to 2.3%, missing expectations of 2.6% and sharply below the 3.1% growth seen in Q3.
  • Inflation signals were mixed: Personal Consumption Expenditure (PCE) prices surged to 2.3% (from 1.5%), suggesting persistent inflationary pressures, while core PCE rose by 2.5%, matching estimates.
  • Initial jobless claims fell to 207K, beating the forecasted 220K, while continuing claims eased to 1.858 million (from 1.900 million).
  • On the Fed’s side, policymakers removed language indicating progress toward the 2% inflation target, signaling a more data-dependent approach. However, Fed Chair Jerome Powell downplayed this shift, stating it was not meant to indicate a significant policy change.
  • Market bets on RBA easing rise as Q4 CPI data from Australia supports a rate-cut case, with headline inflation easing to 2.5% y/y (from 2.8%) and the trimmed-mean CPI slipping to a three-year low of 3.2%, below the RBA's forecast of 3.4%. Traders are now fully pricing in a 25bps cut in February.

AUD/USD technical outlook: Consolidation phase continues

The AUD/USD remains within a narrow 0.6230-0.6300 trading band, reflecting market hesitation ahead of key data releases. The MACD histogram shows green bars, hinting at underlying bullish momentum, while the RSI sits at 45 in negative territory, reflecting mild selling pressure.

Despite recent declines, the short-term outlook remains neutral-to-positive, with traders looking for a breakout above 0.6300 to validate further gains or a drop below 0.6200 to confirm renewed bearish sentiment.

GDP FAQs

A country’s Gross Domestic Product (GDP) measures the rate of growth of its economy over a given period of time, usually a quarter. The most reliable figures are those that compare GDP to the previous quarter e.g Q2 of 2023 vs Q1 of 2023, or to the same period in the previous year, e.g Q2 of 2023 vs Q2 of 2022. Annualized quarterly GDP figures extrapolate the growth rate of the quarter as if it were constant for the rest of the year. These can be misleading, however, if temporary shocks impact growth in one quarter but are unlikely to last all year – such as happened in the first quarter of 2020 at the outbreak of the covid pandemic, when growth plummeted.

A higher GDP result is generally positive for a nation’s currency as it reflects a growing economy, which is more likely to produce goods and services that can be exported, as well as attracting higher foreign investment. By the same token, when GDP falls it is usually negative for the currency. When an economy grows people tend to spend more, which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation with the side effect of attracting more capital inflows from global investors, thus helping the local currency appreciate.

When an economy grows and GDP is rising, people tend to spend more which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold versus placing the money in a cash deposit account. Therefore, a higher GDP growth rate is usually a bearish factor for Gold price.