AUD/USD pares dismal Australian GDP-led losses

The AUD/USD pair reversed majority of awful Australian GDP-led slide and has now recovered around 40-pips from session low.

Currently trading around mid-0.7400s, a broad based US Dollar retracement has been one of factors supporting the pair's recovery from session low. Earlier on Wednesday, the pair came under intense selling pressure after Australia's GDP figure showed a sharp contraction, first in 5-years, during third quarter of 2016. 

The disappointing GDP-led fallout, however, was limited for the major as the same was pre-empted by RBA at its latest monetary policy meeting on Tuesday had signaled towards a slowdown in the year-end growth rate, before picking-up again. Hence, despite of today's shocking GDP report, the central bank is unlikely to move towards easing its monetary policy stance in the near-further and has been supportive of the pair's recovery. 

Focus now shifts to Chinese macro data ahead of next week's much awaited Fed monetary policy decision. Being Australia's largest trading partner, Chinese economic data has a lasting effect on the Australian Dollar and other commodity-linked currencies. 

Technical outlook

Omkar Godbole, Analyst and Editor at FXStreet, notes, "Pair’s repeated failure to take out 0.7489 (38.2% of Nov 8 high – Nov 21 low) if followed by a drop below 0.7400 today on a weaker-than-expected Australia Q3 GDP release would open doors for a retreat to 0.7311-0.73 handle. A daily close below 0.73 would signal that the sell-off from the November 8 high of 0.7778 has resumed. On the higher side, only a daily close above 0.7489 would signal bearish invalidation."