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Aussie hits one month high after better than seen Q1 GDP

6/7/2017, 10:03:55 AMBasics of Trading
Aussie hits one month high after better than seen Q1 GDP

The Aussie hit a one-month high after better-than-expected first quarter growth figures on Wednesday while investors brace for a big day on Thursday with the European Central Bank, testimony by fired FBI chief James Comey and the U.K. election.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.08% to 96.58.

Australia reported first quarter GDP rose 0.3%, compared with a gain of 0.2% seen quarter-on-quarter and 1.7% annual pace, compared to a 1.5% gain seen. AUD/USD traded at 0.7540, up 0.44%, while USD/JPY changed hands at 109.48, up 0.06%. GBP/USD was quoted at 1.2902, down 0.09%.

The better than expected performance came one day after the Reserve Bank of Australia (RBA) cautioned that growth "is expected to have slowed in the March quarter." That, along with disappointment in the country's current account, prompted some economists to expect a quarterly economic contraction.

Later, China reports FX reserves with a figure of $3.045 trillion expected for May, a bump higher than $3.030 trillion in April.

Overnight, the dollar sank to seven-month lows, wiping out all its gains since Donald Trump was elected U.S. president as investors ditched riskier assets for safe havens ahead of a trio of risk events on Thursday.

Although investors widely expect the Federal Reserve to hike its benchmark rate at its June 13-14 meeting, investors began to question whether the U.S. economy can sustain two additional rate hikes in the wake of recent economic data suggesting that the economy is not as robust as hoped.

U.S. manufacturing activity in May grew at a slower pace, while data from the U.S. Labor Department last Friday showed that the economy created far fewer jobs than expected.

A trio of risk events on Thursday, are expected to continue to drive sentiment across markets, as investors will contend with Britain’s general election, the European Central Bank’s policy meeting and former FBI chief James Comey’s testimony before the Senate Intelligence Committee.

Investors expect a rise U.S. political turmoil on Thursday, when former FBI director Comey testifies about Russia’s alleged involvement in the U.S election and Trump’s alleged attempt to halt an investigation into former national security advisor Michael Flynn The Trump administration has struggled to progress on its pro-growth economic agenda, which is widely viewed as a boon for the dollar, amid continued political turmoil engulfing President Trump.

GBP/USD fell as sterling continued to ebb and flow with the release of each opinion poll ahead of the general election on Thursday. Opinion polls have shown that Prime Minister Theresa May’s lead over the Labour party has been significantly reduced in recent weeks.