Aussie GDP preview - what to expect in AUD/USD?

AUD/USD has been edging higher in early Asia and taken on the 20 sma on the hourly time frame in a recovery of the risk-off supply overnight on the Brexit story ahead of a busy schedule in Asia that will include Chinese PMI's and Australia's Q1 GDP before next week's RBA meeting.

Despite there being a long wait for this Q1 GDP data today, markets are going to be tuned in for it, especially after yesterday's upbeat export data for the same period. The underlying tone in markets could well reflect that of the U.S. risk aversion on the back of the Brexit leave campaign taking the lead in the polls overnight, but that will be put aside on the back of the release of the key tier one numbers although could cap any significant attempts on the upside and follow throughs. However, as noted by analysts at Westpac, "Australia's Q4 GDP data on 2 March kicked off a sustained AUD rally so there is plenty of interest in today's report (11:30am Syd/9:30am Sing/HK)."

GDP expectations:

The analysts at Westpac offered their preview, "After the upside surprise on Q1 exports yesterday, Westpac now looks for 0.7% q/q, 2.8% y/y on GDP, a decent reading though not as eye-catching as the 3.0% y/y pace in Q4 2015. Net exports will dominate growth, with a 1.1ppt contribution, thanks to both resources exports (+5.6%) and services (6.1% q/q, 14.1% y/y, clear evidence of the benefits of a weaker AUD). But clearly if net exports will contribute 1.1pts while overall GDP is just 0.7% q/q, then there is considerable weakness elsewhere, especially business investment which should be a drag on growth (again) throughout the year. Slower jobs growth and weak wages should crimp consumption growth. Bloomberg's survey now has a median of 0.8% q/q though not all forecasts have been updated. The 0.7% we expect should be in line with the RBA's May SOMP forecasts and thus have no particular impact on Tuesday's policy decision."

AUD/USD levels to monitor

Recent price action in AUD/USD brings in the 50 sma on the hourly sticks and the 200 sma on the same time frames as levels broken when the price rallied through the 0.72 handle until testing the 100 sma on the 4hr candles that have been converging with the 200 dma through 0.7250. So far, gains have fallen short of the 20 dma at 0.7270 and the 100 dma at 0.7350 where price was last capped on the 16th May at 0.7366.  To the downside, the recent low is located at 0.7145/48 guarding 16th Dec low of 0.7096.