AUD bulls were dealt another blow overnight as the latest data showed Australian GDP has slowed down significantly over the third quarter. Quarter on quarter, GDP grew just 0.3%, down sharply from the prior month’s 0.9% reading and well below analyst expectations of a 0.6% reading.
The year on year figure was just as bad. Growing at 2.8% over the quarter, well below the prior month’s 3.1% reading and well below expectations of a 3.3% reading, AUD GDP registered its slowest pace of growth in two years.
Bad News For The RBA
The breakdown of the data makes for bleak reading and confirms many of the fears held by the RBA. Household consumption growth, which accounts for over 50% of the economy, was seen growing just 0.2% on the quarter, dragged down by low consumer spending, particularly on discretionary items.
Overall the data makes for the weakest increase in GDP since September 2016 and will be a disappointment to the RBA which recently highlighted its optimism over the labor market and inflationary environment.
While AUD has benefitted recently from news of a truce between the US and China, on the domestic front, the hurdles are still obvious, and this latest data does very little to suggest that the RBA will be increasing rates anytime soon.
The data overnight has reversed the rally seen off the .7010 base support. To the topside there is plenty of good resistance overhead with key Fibonacci retracements from the 2018 highs sitting in the region of prior swing lows, offering structural resistance and creating plenty of difficulty for a further grind higher.
For now, we are likely to see AUD consolidating in the low end of the base until any further positive news around the US /China trade deal.