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Aussie Edges Higher After Robust GDP Report

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Aussie Edges Higher After Robust GDP Report

The Australian dollar moved higher on Wednesday poised to test trend line resistance after the government reported stronger than expected growth. Robust household spending and solid exports pushed the GDP report above forecasts. China confirmed its GDP for the quarter which also gave a boost to the currency down under.

The Australian GDP grew 0.8% quarter over quarter in Q4 of 2014 after expanding 0.6% in Q3 and topped consensus of +0.7%, lifted by increased household spending. Net exports added 0.6 percentage points to growth, while investment cut 0.5 percentage points.

China’s Service PMI reported by HSBC increased to 51.0 from 50.7. China has kept its annual GDP growth target at 7.5% for 2014, allaying the concerns of some but disappointing others that it would lower the goal as part of the government’s focus on reforming the economy and trying to rein in ballooning credit.

The US dollar was also under pressure after ADP reported that private payrolls increased by 139K compared to the 150K expected by economists. The service sectors increased by 120K which was also lower than expected, but as per most economic data points released in the US for January and February, the weather was the catalyst for the weak data.

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The AUDUSD attempted to break through trend line resistance that connects the highs in October of 2013 to the highs in February and comes in near 0.9000. Momentum on the currency pair is negative with the MACD (moving average convergence divergence) index printing in negative territory but the trajectory is flat and could be turning higher. The RSI (relative strength index) has turned higher with price action which reflects accelerating momentum while printing near 53, which is in the middle of the neutral range.

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