An Inside Look Into the Aussie Before and After Q2 GDP Data From China

The Aussie has been up and down over the past two days as the country awaits Q2 GDP data out of China. China is a major trading partner of Australia, so the country’s GDP has a bigger impact on the Aussie than the GDP of other countries.

A lower-than-expected GDP can signal fewer exports out of Australia, which would have an impact on Australia’s GDP going forward.

The country is on a slump as housing starts dip, costs of living rise, wages remain stagnant, and just 22% of workers expecting a raise. Data before and after China’s GDP release shows just how easy a currency can fluctuate based on potentially bad and good news.


Aussie Weakens Before China’s Q2 GDP Data

Less than 24 hours ago, the Aussie dipped ahead of China’s data release. The AUD/USD dipped 0.18%, down to 0.7617. The USD/JPY was up 0.11% to 105.50, and the GBP/USD was up 0.26% to 1.3377.

Reports indicate that China expected a 6.6% growth in Q2 on the year and a 1.6% growth on the quarter.

The greenback’s strength rose 0.02% at the time against a basket of six major currencies. Japan’s yen dipped across the board, as the country’s Prime Minister provided hope for a new stimulus package in an effort to boost growth in the country.

The Bank of England chose to leave interests rates at 0.5% on Thursday. Investors and analysts believed the bank would lower rates. The meeting signaled potential easing in August. United States data pointed to initial jobless claims on the week remaining at 254,000.

Data out of all countries has an impact on the Aussie to some extent, but none have the same impact as China’s GDP.

Aussie Strengthens Following Release of China’s Q2 GDP Data

Data from an hour after the figures above showed that the Aussie strengthened slightly, although it ended the day down. AUD/USD was down 0.08%, trading at 0.7625. The hour before, AUD/USD traded down 0.18% at 0.7617.

The USD strengthened further against the JPY, up 0.78% to trade at 106.20 and higher than the 105.50 level an hour prior. The GDP/USD continued to rally, up 0.57% following the news.

China beat expectations and posted a 6.7% gain on the quarter ended June year-on-year. The country’s GDP quarter-on-quarter rose 1.8%, surpassing expectations by 0.2%.

The yen remained weak across the board, leaning toward the currency being less affected by China’s data than Australia.

Positive data out of China helped the Aussie recover in the short-term, but the currency has since plummeted further, with AUD/USD trading at 0.7590, down 0.54%. The data indicates that the Aussie is highly influenced by China, but there are other concerns at play, too.

EUR/USD is down 0.49%, and GBP/USD is down 0.87% at mid-day on Friday.

The Euro and Pound are two currencies still closely tied. The two are down as investors try to make sense of the BoE’s latest announcement. The pound has rallied on the week and is on pace to secure its best week since 2009.

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Daniel Simmons