Australia Q3 GDP likely to witness sharp slowdown, to remain below RBA’s implied forecast

The third-quarter gross domestic product of Australia, scheduled to be released next week is expected to show a sharp slowdown, with the preliminary estimate being flat q/q growth. Also, it is likely to remain below the RBA’s implied forecast.

Australia’s GDP is expected to drop to 2.3 percent from 3.3 percent in Q2, well below the RBA’s implied forecast of approximately 3 percent, ANZ reported.

"We expect that the weakness in GDP will prove short-lived. Today’s retail sales report showed momentum improving sharply into Q4, while housing construction is likely to rebound given the amount of work still in the pipeline," ANZ commented in its recent research report.

While in the near term the Italian referendum may support some pick-up in volatility, strength in USD will remain the main driver of the AUD. Next week, the RBA and Q3 GDP in Australia should have only a limited impact on the AUD.

Meanwhile, the AUD/USD has formed a bearish doji at 0.74, down 0.05 percent, while the FxWirePro's Hourly AUD Strength Index remained neutral at -19.28 (a reading above +75 indicates bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex