AUD/NZD posts modest gains above the 1.0850 area following Australia's Q2 GDP

• AUD/NZD edges higher to 1.0853 in the Asian session.
• Australia’s GDP came in better than market expectations.
• Market players will closely monitor RBA Governor Philip Lowe’s speech on Wednesday.

The AUD/NZD cross gains momentun above the mid-1.0800s following the release of Australia’s Gross Domestic Product (GDP) during the Asian session on Wednesday. The major pair currently trades near 1.0854, gaining 0.12% on the day.

The latest data released from the Australian Bureau of Statistics (ABS) revealed on Wednesday that the nation's GDP climbed 0.4% in the second quarter of 2023 from 0.2% in the first quarter and better than the estimations of 0.3%. The annual second-quarter GDP increased by 2.1%, compared to a 2.3% rise in the first quarter and beating the expectations of a 1.7% gain. Additionally, the Australian S&P Global Composite PMI climbed to 48.0 from 47.2 and S&P Services PMI rose to 47.8 from 46.7.

Following the RBA interest rate decision on Tuesday, the Reserve Bank of Australia (RBA) decided to maintain the Official Cash Rate (OCR) unchanged at 4.10% at its September meeting. The central bank stated that the decision to keep interest rates on hold gives it more time to examine the effect of the current rate hike and the economic outlook. However, RBA Governor Philip Lowe’s speech later on Wednesday could some hints about the further monetary policy for the entire year. The hawkish remark for the entire year might lift the Aussie against the Kiwi and act as a tailwind for the AUD/NZD cross.

On the other hand, the ANZ Commodity Price for August dropped to 2.9% from a 2.6% decline in July. Earlier this week, the New Zealand Terms of Trade Index improved to 0.4% in the second quarter, compared to a decline of 1.5% in the previous reading and an expected drop of 1.3%.

Looking ahead, RBA Governor Philip Lowe’s speech will be a closely watched event later on Wednesday. Later this week, New Zealand’s Manufacturing Sales for the second quarter and Australia’s Trade Balance will be released. Traders will take cues from the data and find trading opportunities around the AUD/NZD cross.