- Above-forecast Aussie Q4 GDP puts a bid under the Aussie dollar.
- AUD/USD jumps more than 20 pips and trades above 0.66.
- Fed’s rate cut is likely helping the AUD cheer a backward-looking data.
The bid tone around the Australian dollar strengthened, pushing the AUD/JPY to fresh session highs above 0.66 after Australia’s gross domestic product data for the fourth quarter bettered estimates by a notable margin.
The GDP came in at 0.5% quarter-on-quarter, beating the forecast for a 0.3% growth and up from the third quarter’s growth rate of 0.4%. In annualized terms, the economy expanded by 2.2%, bettering the expected growth rate of 1.9%, having registered a growth rate of 1.7% in the third quarter.
AUD/USD jumped from 0.6588 to 0.6610 immediately following the release of the day at 00:30 GMT. The Aussie dollar is cheering the backward-looking fourth-quarter data despite general consensus that the economy has slowed down sharply in the first two months.
Moreover, the sentiment around AUD/USD turned bullish following the US Federal Reserve’s (Fed) surprise rate cut on Tuesday and the upbeat GDP likely bolstered the bullish pressures.
The US central bank reduced borrowing costs by 50 basis points, its biggest single cut in more than a decade, to contain the economic fallout from the coronavirus outbreak, sending the treasury yields and the greenback lower. The Reserve Bank of Australia also cut rates by 25 basis points on Tuesday and left the doors open for another cut in April.
The Aussie dollar could continue to gain altitude during the day ahead as the risk assets are again showing signs of life. Notably, the futures on the S&P 500 are reporting a 0.70% rise at press time.