Australia GDP grew merely 0.3% qoq in Q3, just half of expectation of 0.6% qoq. That’s also a sharp slow down from Q2’s 0.90%. On annual basis, GDP growth slowed to 2.8% yoy, well below expectation of 3.4% yoy. In November Monetary Policy Statement, RBA projected GDP growth to be at 3.5% in 2018. And it’s now highly likely to miss such projection. Based on the steep slowdown in momentum, it’s getting doubtful if 2019 forecast of 3.25% growth would be met. And, RBA might need to revise down its projections in the next MPS in February. But after all, the slowdown will firm up the case for RBA to continue to stand pat throughout 2019, and probably deeper into 2020.
Australian Dollar is suffering double blow of GDP miss and risk aversion. it’s trading as the weakest one for today so far, followed by New Zealand Dollar. While AUD/USD’s fall from 0.7393 is deep, there no change is the outlook as long as 0.7199 support holds. That is, corrective rebound from 0.7020 is still in favor to extend to 38.2% retracement of 0.8135 to 0.7020 at 0.7446 before completion. Nevertheless, break for 0.7199 will suggest that such correction is completed earlier than expected.
