The Australian Dollar was riding high against most of its G10 counterparts during the morning session Wednesday after official data appeared to show the economy recovering its poise in the second quarter, although some analysts say there is trouble ahead and that nascent gains won't last long for the Aussie.
GDP growth was 0.5% for the second quarter, the Australian Bureau of Statistics (ABS) says, which was unchanged from the upwardly-revised pace seen in the prior period but in line with the consensus. However, this left the expansion running at an annualised 1.4% for the quarter, the slowest pace of growth since the financial crisis.
Furthermore, Wednesday's number was lower than the Reserve Bank of Australia (RBA) suggested just a month ago that it would be. The RBA had said that growth would be "firmer" in the recent quarter than it was previously while its official forecasts were looking for quarterly and annualised numbers of 0.75% and 1.7% respectively.
"Amid a modest rise in household consumption (0.4%) and a further fall in dwelling and business investment, domestic demand was saved only by the strength of public spending. Stripping out public demand shows another contraction in private final demand (-0.1% q/q) for the fourth consecutive quarter, taking y/y negative (-0.3%) for the first time since Q3 2009," says Elsa Lignos, head of FX strategy at RBC Capital Markets.


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