Australia escapes technical recession, AUD/USD fades spike to 0.7663

Australia fourth-quarter GDP came-in at 1.1% quarter-on-quarter, beating the estimate of 0.8%. This is a big rebound from the prior quarter’s 0.5% contraction.

The data not only shattered expectations, but also meant Australia avoided a technical recession. The AUD/USD, which was already in a recovery mode ahead of the data release, jumped to a session high of 0.7663 only to fall back to 0.7650 levels.

Moreover, the rebound in the GDP was largely expected and priced-in. Furthermore, investors have turned cautious ahead of President Trump’s budget speech.

The bid tone around the US dollar strengthened earlier today hawkish comments from Fed’s William Dudley, Robert Kaplan and John Williams.

Focus on Trump speech

The demand for the US dollar could spike if Trump unveils details of the fiscal plan and manages to meet market expectations. Trump trade is at a risk fizzling out of Trump keeps mum on the details of the tax plan.

AUD/USD Technical Levels

A breakdown of support at 0.7618 (Feb 14 low) could yield a sell-off to 0.76 (zero figure), under which a major support is seen at 0.7520 (200-DMA). On the higher side, breach of 0.7678 (100-DMA) could see the pair revisit 0.7707 (Feb 27 high) and 0.7741 (Feb 23 high).