Australian dollar may rise after US GDP boosted Dow Jones, S&P 500, Nasdaq 100

Asia-Pacific market briefing – AUD/USD may rise after rosy US session

The sentiment-linked Australian dollar pulled cautiously higher on Thursday after US GDP data bolstered risk appetite on Wall Street. At the end of the session, the Dow Jones, S&P 500 and Nasdaq 100 gained 0.61%, 1.1% and 1.76%, respectively. This risk-on dynamic dented demand for haven assets, pushing the US dollar lower.

In the fourth quarter of 2022, the US economy grew 2.9% q/q. That was higher than the 2.6% consensus. However, personal consumption – the largest segment of growth – expanded only 2.1% against the 2.9% estimate. The details of the report showed that the upside surprise in the headline rate was caused by volatile components, such as inventory growth and government outlays.

Overall, this likely painted a mixed picture. Arguments can be made here that point towards a hard and soft landing. This may keep the Federal Reserve on its current path with markets looking for the tightening cycle to soon conclude in the coming few months. The Australian dollar has also been benefiting from a surprisingly strong local inflation report earlier this week that increased RBA rate hike bets.

Heading into Friday’s Asia-Pacific trading session, AUD/USD is eyeing Australian PPI data for the fourth quarter. Elevated readings that fall in line with the CPI report may keep markets focused on a more hawkish RBA. Furthermore, if traders extend the rosy Wall Street trading session in Asia, the Australian dollar may continue benefiting.

Australian dollar technical analysis

On the daily chart, AUD/USD appears to be trading within the boundaries of a bearish Rising Wedge. Meanwhile, a Doji candlestick pattern has emerged as prices tested the August high. The latter is a sign of indecision. Should prices reject resistance, a turn lower towards the floor of the wedge may occur. Otherwise, extending gains exposes the May high at 0.7283.

AUD/USD daily chart

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