Australian Dollar: Strong GDP and carry support – BBH
Brown Brothers Harriman’s (BBH) Elias Haddad notes AUD/USD fell toward 0.7125 on broad US Dollar (USD) strength, even as Australia’s Q2 GDP beat expectations at 0.4% q/q and 2.1% y/y.
Brown Brothers Harriman's Elias Haddad reported that the Australian Dollar (AUD) fell to a multi-day low of 0.7125 against the US Dollar (USD) due to broad USD strength. However, Australia's Q2 GDP growth surpassed expectations, rising 0.4% quarter-over-quarter and 2.1% year-over-year, outpacing the Reserve Bank of Australia's (RBA) forecast of 1.9% year-over-year.
This strong GDP performance was driven by robust household spending, with vehicle purchases contributing the most to the growth. The RBA futures market indicated a significant shift in expectations, with the probability of additional rate hikes rising from 55% to nearly 80% following the GDP release. Analysts noted that Australia's attractive carry and strategic exposure to commodities linked to energy, AI, and defense continue to support the AUD.
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