The Australian GDP announcement for
the second quarter of 2012 showed that the Australian economy grew much more
than expected. The economy grew 1.3%, compared to official estimates of a 0.5%
growth. After a month of pessimistic economic news for Australia and in the
wake of further interest rate cuts, such a result came as welcome news for the
nation and sparked activity in forex trading.
The Australian Dollar (AUD) rallied
in many of its denominated currency pairs, showing particularly strong gains
against the US Dollar (USD).
The AUD has staged a recovery in
forex trading ever since the unexpected half-point interest rate cut made by
the RBA on May 1. The encouraging GDP figures account for the last spike seen
in the graph above, showing a strengthening AUD despite the RBA cutting the
rate by a further quarter-point at the start of June.
Fittingly for forex trading and
currency pairs, there are always two sides to every coin. Just as the AUD
strengthened on the back of the GDP announcement, the USD has almost
simultaneously weakened after economic data released by the US Bureau of
Labour. US non-farm payroll figures, a key economic indicator for the country
released on June 1, showed growth in the employment sector that was far below
national estimates. What this has served to do is strengthen the calls for
another round of quantitative easing, which in the short term would devalue the
USD due to its inflationary effect. Such a move could spark further movement in
forex trading against the USD, and possibly towards the Aussie.
It is important to see how a GDP
announcement and other economic news can influence a currency pair. You can
keep track of all the latest forex trading developments with IG Markets. They provide
a dedicated forex focus, which keeps track of all the recent movement in the
major currency pairs, as well as an extensive collection of analysis and
frequent market updates. You can find the forex focus by clicking this
link.
The above information should not be
construed as investment advice. Please consider the Product Disclosure
Statement available from IG Markets. CFD trading can result in losses that
exceed your initial deposit. In addition, you do not own or have any interest
in the underlying asset.
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