The Australian Dollar soared anew, hitting a fresh January 17 peak at 0.6898 from 0.6798 yesterday, easing to 0.6892 in late New York. Earlier Australia’s CBA Services Index rose to 26.9 from 25.5 in April and much better than forecasts at 0.13. AUD/USD jumped past 0.69 cents to 0.6916, settling currently at 0.6914.
Yesterday the RBA kept its policy unchanged. While the Australian central bank emphasized the need for accommodative policy, they indicated that interest rates will not increase until there is meaningful progress made on full employment. There were no fresh reports on the China-Australia trade relations where tensions have risen in the past week.
Australia’s Q1 GDP released today (11.30 am Sydney time) is expected to see the first contraction since the GFC in 2008. Expectations are for a contraction of -0.3 to -0.4% for Q1 from 2019 Q4’s +0.5%. If the number is better than -0.3%, we will see a test of 0.6920, and 0.6950. A larger contraction to -0.5% will see a corrective move lower to 0.6850, and 0.6820.
Look for the Aussie to consolidate today between a likely 0.6820-0.6920 range. Look to sell this rally. A correction south is due.