AUD/USD benefits from softer US dollar following US GDP data

The AUD/USD pair experienced an upward spike of 0.70% as it rose towards the 0.6775 level. The US’s Q3 GDP growth was lowered down from 5.2% to 4.9%, reflecting a slower-than-expected rate of economic activity.

The US dollar was under further pressure after the 5-year and 10-year US Treasury rates fell to multi-month lows. Thursday’s trading session saw an increase in the value of the Australian dollar relative to the US dollar, driven by the revision of the Q3 GDP figures, which served to depreciate the US dollar.

The positive impact was increased by additional moderate-level economic indicators, such as the Philadelphia Federal Reserve (Fed) Manufacturing Survey and Jobless Claims.

In this regard, the US Bureau of Economic Analysis’s final estimate for Q3 real GDP growth showed a 4.9% annual increase, which was less than the 5.2% market forecast.

Additional information revealed that the US Department of Labor’s initial Jobless Claims report for the week ending December 16 showed an increase in claims to 215K, compared to the previous week’s 202K. Additionally, the Philly Fed Manufacturing sector survey saw a significant decline in December, dropping to -10.5. Even with the increase, the number fell short of the projected 215K.

Looking broader, there is growing concern about Federal Reserve easing, which is pushing down on the US dollar. The Fed’s dovish approach at its most recent meeting, held on Wednesday, 2023, caused the US dollar to decline despite previous measures by officials to contain the damage. This has led to an increase in expectations.

Furthermore, new data that supports the dovish outlook and the argument for earlier rate cuts could open the door for further gains for the AUD/USD. Investors will be focusing on the US Personal Consumption Expenditures (PCE) data for November on Friday. The Fed uses this statistic extensively to estimate inflation.

US bond rates, meanwhile, fell to multi-month lows earlier in the morning but now appear to be rising. The USD loses appeal when the 2-year rate is at 4.34% and the yields on the 5- and 10-year notes are both at 3.86%.