Talking Points:
- Australian GDP slows for a fifth consecutive quarter
- Aussie Dollar Drops to 6-Year Low After GDP data
- Drop in front-end yields hints at RBA rate cut bets
The Australian dollar fell as GDP posted a fifth consecutive decrease in the second quarter. The Aussie fell 0.3 percent against its US counterpart. The much-anticipated gauge of economic health showed the country grew 2 percent year-on-year in the three months through June 2015, disappointing expectations calling for a 2.2-percent increase. Growth has been slowing since the first quarter of 2014.
The Aussie fell alongside Australia’s front-end government bonds yields, indicating the disappointing GDP figure may have sparked speculation about further RBA easing on the horizon. The central bank chose to leave its cash rate unchanged at 2 percent yesterday. RBA Governor Glenn Stevens stated that future policy decisions will be contingent on incoming economic and financial news-flow, opening the door for a dovish turn if data proves disappointing. The next policy meeting is on October 6th. DailyFX Senior Technical Strategist Jamie Saettele says the focus remains on the downside, with the next major level of support in the 0.6747/71 area.
