Today, the Australian dollar gained another bit of support from macroeconomic reports – Australia's economic growth data turned out to be better than expected. The AUD/USD pair moved up to the middle of the 0.78 level, approaching the nearest resistance level of 0.7850 (Tenkan-sen line on the daily chart). However, its buyers didn't test this target, and reacted weakly to the most important release. It is clear that traders are focused on the US dollar, which cannot determine the direction of its movement. As a result, the pair stayed in place, despite today's publication in the "green" zone. In my opinion, these figures cannot be ignored, as they will still manifest themselves in the context of the development of the upward trend of the AUD/USD pair.
Australia's data on GDP growth for the 4th quarter of 2020 was known. It should be recalled that the country began to actually lift its quarantine restrictions only at the end of November, so today's release reflected the negative results of the lockdown. Nevertheless, the Australian economy has shown its "stress tolerance" again. In quarterly terms, GDP rose by 3.1% (with a growth forecast of up to 2.5%). In annual terms, the indicator came out at -1.1%, rising from the previous value of -3.7%. Experts' forecast was -1.8%. In other words, the indicator nearly hit its record high in the third quarter on a quarterly basis, when the Australian economy increased by 3.4%.
The framework of today's data suggests that the country's economy was also growing due to the growth of consumer spending, with the component increasing by 4.3%. Australian residents began to spend money on entertainment, recreation, going to cafes and restaurants. In addition, it is clear that many Australians returned to their jobs (or found another job) after the lockdown was over and quarantine restrictions were lifted, which also affected their consumer activity. Another part of the release was the volume of government spending, which rose by 0.8%. The volume of private investment also rose by almost 4%. At the same time, imports of goods and services increased by almost 5%, followed by exports, which also did by 3.8%.
Today's publication is even with other key macroeconomic releases. Earlier, Australian labor market data was released, which also came out better than expected. In fact, almost all of the components of the latest Australian Nonfarm came out in the "green" zone. In particular, the unemployment rate declined by 6.4%, instead of the expected 6.5%. This indicator has been moving in a downward trend for the three consecutive months.
It should be recalled that the RBA members eased the parameters of monetary policy during their last meeting. However, they did not announce similar steps in the future, thereby supporting the AUD. Expanding the program of stimulating the economy, the Central Bank noted that their next actions will largely depend on the dynamics of key indicators. In this context, it can be concluded that the latest macroeconomic releases allow the RBA to maintain a wait-and-see attitude. This is also because it is still too early to talk about a tightening of monetary policy, although the pace of Australia's economic recovery is clearly ahead of earlier forecasts by the economists of the Australian regulator. All things considered, the Central Bank can allow themselves to voice restrained optimism about future prospects.
In turn, the US dollar continues to focus on the Treasury yield, whose growth slowed down. Theoretically, this fundamental factor cannot sustainably support dollar bulls without additional support from Fed's key reports. For example, if Friday's Nonfarm enters the "red zone" again, and Fed members continue to say "dovish" rhetoric, the US dollar will collapse again, although it is still likely to further rise in the short term. But if we talk about the medium-term interval, then the situation is quite clear. Most will depend on the dynamics of the main macroeconomic reports and the position of the Fed members.
Technically, the AUD/USD pair is between the middle and upper lines of the Bollinger Bands indicator, which indicates that the upward direction is the priority. So, bulls must break through the level of 0.7850 (Tenkan-sen line on the daily time frame). After that, the Ichimoku indicator will form a bullish signal, namely "Parade of Lines", which will allow the price to further rise to the main resistance level of 0.7960 (upper Bollinger Bands line on the same timeframe).
To simply put it, it is suggested to consider longs when the pair consolidates above the target of 0.7850. In general, the upward trend remains in the medium-term. And as soon as the dollar bulls finally relax, growth can be expected soon. The last stop of the upward movement is the borders of the level of 0.80.
