The AUD/USD currency pair has taken a significant dive, plunging to near 0.6400. This sharp decline comes as the Australian Dollar weakens following slower-than-expected Australian GDP growth in the third quarter of the year.
The Australian Bureau of Statistics disclosed that the Australian economy expanded at a surprisingly sluggish pace. On an annual basis compared to the same quarter of the previous year, it grew by 0.8%, falling short of expectations and also slower than the 1% growth witnessed in the previous quarter of this year. Economists had estimated an annualized Q3 GDP growth of 1.1%. Looking at the quarterly figures, the Australian economy expanded by 0.3%, which was slower than the expected 0.4% yet faster than the prior reading of 0.2%.
This weak Q3 GDP data has heightened expectations for dovish moves from the Reserve Bank of Australia (RBA). Concerns regarding Australian economic growth have been mounting, leading the market to anticipate that the RBA might commence reducing interest rates starting from its policy meeting in April 2025.
At the same time, a slight upward movement in the US Dollar (USD) has exerted additional downward pressure on the AUD/USD pair. The US Dollar Index (DXY), which monitors the value of the Greenback against six major currencies, has risen to nearly 106.60 ahead of Federal Reserve (Fed) Chair Jerome Powell’s speech scheduled for 18:45 GMT. The market is looking to Powell’s speech for hints on whether the central bank will continue to ease its monetary policy further in its meeting on December 18.
During today’s trading session, investors will also be closely watching the United States (US) ADP Employment Change and the ISM Services PMI data for November, as these pieces of economic information could further influence the dynamics of the AUD/USD pair and broader market sentiment.
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