AUD/USD trips down below 0.6500, though clings to weekly gains despite upbeat US GDP

• AUD/USD drops on upbeat US data amidst a risk-on mood.
• The US Dollar got bolstered by GDP and unemployment claims data, though Durable Orders missed estimates.
• Australia’s Q3 CPI justifies the Reserve Bank of Australia (RBA) next week’s rate hike.

The AUD/USD tumbled below 0.6500 from weekly highs around 0.6521 after news emerged that the US economy grew at a higher pace than estimated, snapping a “technical recession” after back-to-back quarters of negative Gross Domestic Product (GDP) readings. Therefore, the US Dollar got bolstered, as shown by the AUD/USD diving towards 0.6470, down 0.37%, at the time of writing.

The Q3 preliminary GDP reading smashed estimates

The Australian Dollar lost traction when the US Bureau of Economic Analysis (BEA) reported that the US Advance Q3 GDP rose by 2.6%, crushing estimates of 2.4%. Factors like the trade deficit narrowing in the third quarter summed 2.77% to the GDP’s increase. The same report flashed that consumer spending is slowing down, from 2% in Q2 to 1.4%.

Elsewhere, the US Department of Labor revealed Initial Jobless Claims the week ending on October 22, which jumped by 217K, lower than the 220K foreseen, though slightly up from the previous week. Durable Good Orders offset that, missing estimates, increased by just 0.4%, below 0.6% MoM, expectations

The US Dollar Index, a gauge of the greenback’s value against a basket of peers, climbs 0.53% at 110.277, while US Treasury yields tumble. The US 10-year bond yield is losing six and a half bps, down at 3.943%, weighed by speculations of a Fed pivot.

Aside from this, Australia’s inflation report on Wednesday escalated speculations for another Reserve Bank of Australia’s (RBA) rate hike. Inflation for Q3 rose 7.3% YoY, while the RBA’s favorite inflation gauge, core trimmed mean rose by 6.1% YoY. According to analysts at Westpac said, “Rates markets continued to place a high probability on the RBA raising the cash rate 25bp next week but yields rose for later dates, such as the May 2023 contract, up from 3.88% to 3.95% and above 3% in mid-2023.” Therefore, the RBA’s next meeting

AUD/USD Key Technical Levels