AUD Soars on Strong GDP Data, Rising Hike Odds
The Australian Dollar saw significant fluctuations on August 24 as it reacted to strong GDP data from Australia. According to BBH's Elias Haddad, AUD/USD fell to a low of around 0.7125 due to broad US Dollar strength.
However, the currency received a boost from robust household spending and rising Reserve Bank of Australia (RBA) hike odds. The RBA's cash rate futures now indicate nearly 80% probability of a 25bps hike on September 29, up from 55% previously.
The release of Q2 GDP data showed that the economy grew 0.4% q/q and 2.1% y/y, surpassing expectations and the RBA's forecast of 1.9% y/y. Household spending made a significant contribution to this growth, driven by vehicle purchases.
Haddad notes that Australia's attractive carry and commodity-linked tailwinds continue to support the AUD.