Australian dollar hit hard after massive Q3 GDP miss

The Australian dollar fell significantly, after recent ABS figures revealed Australia’s Gross Domestic Product slowed in September, missing expectations.

GDP misses expectations

Q/Q growth fell to 0.3%, and was expected to come in at 0.6%, while domestic demand came in weak.

IG Market Analyst Kyle Rodda says the numbers were a significant miss.

“The theme of a weaker Australian consumer shines through. Spending is soft, consumption looks like its still being funded by eating into savings, and income growth is down.” Said Mr Rodda.

According to the latest ABS figures, last quarter the economy grew by 0.9%, meeting expectations while GDP growth over the year slowed to 2.8% below 3.3% expectations.

ABS figures show household final consumption expenditure in September increased 0.3% contributing 0.2 percentage points to GDP growth.

September compensation of employees increased by 1.0%, while net exports contributed 0.3 percentage points to GDP growth driven by a decline in imports.

Figures show the terms of trade rose 0.8% in Q3.

The data has surprised analysts, particularly after the RBA at its meeting yesterday had talked up the growth prospects of the Australian economy, forecasting GDP growth will average 3.5% this year and next.

“Perhaps softer consumption will begin to weigh more on the economy than previously expected. Australian households don't look like they could whether a rate hike at the very least.” Said Mr Rodda.

Australian Dollar Price

The Australian dollar against the greenback crashed upon the news, coming off well-over 50 points immediately after the release. The AUD/USD price fell below 0.7300 from 0.7352 in the aftermath and is predicted to keep falling.

The post-GDP crash comes after the A-Dollar fell below 0.7350 last night as risk-proxies were dumped in reaction to China-US trade war concerns.

IG Market analyst, Kyle Rodda says “The likelihood rates traders will bring forward their RBA-hike expectations in from 2020 is rather slim.”

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IG Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.

Find articles by writer

Find out more about