Australian dollar strengthens on upbeat GDP data
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Daily Currency Update
The Australian Dollar (AUD) extended its gains on Wednesday, after finding strong support near the US$0.6500 level. At the time of writing, the AUDUSD pair is trading near session highs around US$0.6525, buoyed by a combination of strong domestic economic data and encouraging signs from China, Australia’s largest trading partner. Investor sentiment improved significantly following the release of second-quarter GDP figures by the Australian Bureau of Statistics. The data showed the Australian economy grew by 0.6% during the April–June period, doubling the previous quarter's 0.3% growth and beating consensus expectations of a 0.5% increase. The stronger-than-expected expansion suggests underlying resilience in the domestic economy, despite global uncertainties and tight financial conditions. The GDP report was well-received by markets, as it helped ease concerns surrounding Australia’s fiscal outlook and the broader economic slowdown. A rebound in household consumption and stronger exports were among the key drivers of growth, reinforcing confidence in the Reserve Bank of Australia’s (RBA) policy trajectory and the country’s economic fundamentals. Adding further support to the Australian dollar, fresh data from China revealed a stronger-than-expected performance in the services sector for August. The Caixin Services PMI rose to 51.8, indicating an expansion and beating the forecast of 51.5. As China remains Australia's largest trading partner, signs of a recovery in Chinese demand are seen as a positive catalyst for the Aussie, particularly for its commodity export sector. Together, the encouraging domestic data and positive developments in China have provided a solid foundation for the AUD’s current rally. Market participants will now look ahead to upcoming data releases and central bank commentary for further direction.Key Movers
The USDJPY pair extended gains during the European session on Wednesday, rising toward the 149.00 level as the Japanese yen (JPY) underperforms amid a sharp sell-off in Japanese government bonds (JGBs). Yen weakness has intensified following a significant rise in long-term JGB yields, with 30-year yields climbing to historic highs near 3.29%. The move reflects growing investor concerns over Japan’s ballooning government debt, prompting a broad reduction in exposure to longer-dated JGBs. As bond prices fall and yields rise, the resulting pressure on the yen is pushing the currency lower against its major peers. Meanwhile, market participants are closely watching upcoming US labour market data. The US JOLTS Job Openings report for July is due at 14:00 GMT, and is expected to show around 7.4 million new job postings—largely unchanged from June’s 7.44 million. Traders will be looking for any signs of softening or resilience in labour demand that could influence the Federal Reserve's policy trajectory. However, the spotlight this week remains firmly on Friday’s Nonfarm Payrolls (NFP) report for August. The data is expected to play a pivotal role in shaping expectations for the Fed’s next move. A strong print could reinforce the “higher for longer” narrative on interest rates, while any significant downside surprise may revive speculation about a potential policy pivot. In the near term, the USDJPY pair appears supported by rising US Treasury yields and a broad demand for the US dollar, while the yen remains vulnerable to domestic bond market volatility and rising rate differentials.Expected Ranges
- AUD/USD: 0.6450 - 0.6650 ▼
- AUD/EUR: 0.5500 - 0.5700 ▼
- GBP/AUD: 2.0500 - 2.0700 ▲
- AUD/NZD: 1.1000 - 1.1200 ▲
- AUD/CAD: 0.8900 - 0.9100 ▼