AU Q2 2022 GDP review and what comes next for the AUDUSD

The national accounts released today showed the Australian economy in the June Quarter expanded by a solid 0.9% and 3.6% YoY. It's the third consecutive quarter of economic expansion for the Australian economy.

The first full quarter of re-opened domestic and international borders was behind a substantial rise in consumer spending and net export growth, offsetting weakness in housing and inventories.

Drilling down into the details, household spending rose by 2.2% as spending on services increased 3.6%, exceeding pre-pandemic levels for the first time. Hotels, cafes, and restaurants (+8.8%), transport services (+37.3%) and recreation and culture (+3.6%) were the main drivers.

Exports of goods and services contributed 1.1 percentage points to GDP growth. The rises were broad-based across rural and mining goods and services exports. Exports of services rose 13.7%, reflecting education-related travel as international students returned to Australia.

Australia's Terms of Trade rose 4.6% during the quarter, contributing 1.0 percentage points to GDP growth, driven by a strong rise in exports (+5.5%), while imports recorded a partly offsetting rise (+0.7%).

Following an unprecedented inventory build-up of $7.8 billion in March, changes in inventories recorded a more moderate build-up of $1.6 billion this quarter, detracting 1.2 percentage points from GDP growth.

Ongoing disruption in the building industry stemming from wet weather and material and labour shortages saw a 2.9% fall in Dwelling activity, following a 4.6% fall in Q1. Non-residential fell by 5% following a 2% fall in Q1.

The household saving ratio declined from 11.1% to 8.7% remaining slightly above pre-pandemic levels but a long way from the 19.8% level it reached in Q3 2021. The fall in the savings rate coming as consumers continue to open their wallets, shop up a storm, and travel abroad.

Today's figures coincided with the start of the RBA's rate hiking cycle in May and come just one day after the RBA raised rates by 50bps to 2.35%, leaving Q3 as the one that should reveal the impact of the RBA's 225bp of rate hikes to date.

While the statement that accompanied yesterday's decision hinted at a more moderate pace of rate rises, more clues may be forthcoming from the RBA Governors' Speech at the Annika Foundation lunch tomorrow.

What does it mean for the AUDUSD?

Following the failure to break above resistance at .6850/70 earlier this week, the AUDUSD is lurching towards the June .6681 low, unable to withstand the heat of an unrelenting rise in the U.S dollar and in USDCNY.

A break/close below .6681 would then see the AUDUSD move towards the next level of support, .6530/00.

Source Tradingview. The figures stated are as of 7^th of Sept 2022. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation

How to trade with City Index

You can trade with City Index by following these four easy steps:

Open an account, or log in if you’re already a customer

• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
Search for the company you want to trade in our award-winning platform
Choose your position and size, and your stop and limit levels
Place the trade

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.