Australian GDP keeps up rate cut speculation

For the first time in more than six years AUD-USD traded below 0.70. Despite disappointing growth figures for the second quarter the Australian dollar failed to breach this level. At only +0.2% (seasonally adjusted, qoq, expected: +0.4%) Australia recorded the lowest growth rates in over two years. As a result speculation that the Reserve Bank of Australia (RBA) may cut rates again continues for the time being. 

The fact that weak momentum in the mining and building sector as well as falling exports are putting pressure on the economy is pointing that way. These are areas that might remain under pressure short to medium term in view of a more cautious outlook for China. However, in yesterday's statement on the rate decision the RBA sounded satisfied with current developments. 

"The AUD has been easing since July is likely to support the economy in Q3, therefore, the RBA will no doubt continue to keep a close eye on the Australian dollar. Rapid appreciation might quickly cause a problem, as Australia still needs the support of a weaker currency as today's growth data illustrated", states Commerzbank.