Aussie Regains Strength Amid Weakening GDP Following Shaky Dollar

Aussie was boosted by better-than-expected GDP figures. However, any news on Omicron might re-ignite volatility. Australia’s GDP contracted by -1.9% QoQ in the third quarter, better than expected by -2.7% QoQ. Over the year, GDP grew by 3.9%. Global stock markets are recovering marginally today, with concerns over Omicron remaining stable for the time being. In consolidative trading in tight ranges, major currency pairs are also bounded.

Shawn Crick, Acting Head of National Accounts at ABS, said: Domestic demand has led to a slump with prolonged lockdowns in NSW, Victoria, and South Wales, resulting in significant cuts in household spending.“The fall in domestic demand was only partially offset by growth in net trade and public sector spending. GDP in the September 2021 quarter was 0.2 percent below the pre-pandemic level in December 2019. ”

The Australian AiG manufacturing index rose 4.4 pp in November. up to 54.8 points. Looking at some of the details, production is up 4.7 to 52.5. Employment rose by 2.0 to 50.0. New orders rose 1.0 to 59.3. Supplies to suppliers increased from 12.2 to 53.4. Raw material prices fell from -3.5 to 78.3. The selling price increased by 4.2 to 68.1. Average wages fell from -1.3 to 62.4.

Aussie Fell From High as the Dollar Pullback on Market Mood

During the American session, the Aussie recovered some of Tuesday’s losses, rising 0.30 percent. Risk-sensitive currencies like the AUD, NZD, and CAD benefit from positive market sentiment in financial markets. Also, after the Omicron COVID-19 variant difficulties and hawkish comments from Fed Chairman Jerome Powell impacted the market sentiment on Tuesday, US equities indices are rising.

On the economic front in the United States, the US ADP Employment Change for November revealed that private payrolls increased by 534K, exceeding experts’ expectations of 525K. Meanwhile, the ISM Manufacturing PMI in the United States increased to 61.1, a tenth more than the 61.0 forecasts. “the US manufacturing sector remains in a demand-driven, supply chain-constrained environment, with some indications of slight labor and supplier delivery improvement.” says Timothy Fiore, chair of the ISM survey committee.