AUD Rebounds On Softer Growth AUDUSD GBPAUD

Despite the multi-year low for annual GDP, it came in around expectations to help lift the Aussie from its lows.

Q3 GDP

1.4% YoY
0.5% MoM

Yesterday we noted that RBA removed any reference to GDP levels in their August statement, which appears to have been a shrewd move. Previously they had pencilled in growth to be ‘around’ 2.5% for 2019; currently average growth for 2019 is just 1.6%, both way below their forecast and trend. Moreover, with annualised growth at just 1.4%, GDP is its lowest since Q3 2009 and clearly beneath trend. Whilst markets are pricing in the potential for a cut this year, they’re still not confident of a cut at their next meeting. That said, expectations for a cut would likely be brought forward if employment data disappoints on the 19^th of September.

For now, AUD/USD is enjoying its corrective rebound and hit a 6-day high simply because GDP hit expectations. Moreover, the USD rally has hit a speed bump following yesterday’s ISM contraction, which is allowing the Aussie a little more headroom.

Yesterday’s bullish outside day suggests an interim low could be in place, and intraday bulls could seek long positions towards 0.6832 resistance.
For now, we favour current price action to be corrective against the bearish trend and possible part of a flat correction (between 0.6677 and 0.6832)
This could allow bears to fade into moves below 0.6832 on the daily chart. A momentum shift around these levels (ie a strong rejection of the level) suggests the correction is over and AUD/USD could head for a break to new lows

Brexit woes continue to weaken the British pound overall, yet headline risks remain for both directions. That said, the daily structure on GBP/AUD suggests we’ve seen the end of a correction and could be headed back towards the 1.7562 low (and possible lower if the trend holds.

The daily trend remains bearish below 1.8336, although the break of its correction line suggests its ready to resume its downtrend
1.8000 is a pivotal level, being a round number and having acted as support and resistance previously, so we’d seek bearish setups beneath this 1.8000
This could allow bears to fade into intraday rallies below 1.8000, or wait for a break of yesterday’s low before assuming trend continuation.
Once caveat with the broken correction line is that we’ve not seen a daily close beneath it, even though current prices are below it. So, one could use a daily close as added confirmation it has broken out.

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