THE TAKEWAY: Australian GDP does not accelerate > European and Chinese slowdown dampen Aussie growth prospects > Australian Dollar little changed
The Australian Dollar was little changed versus the U.S. Dollar after quarterly and yearly gross domestic product figures were released. GDP was unchanged on a yearly basis for the second quarter of this year at +3.7 percent which met expectations. On a quarterly comparison however, gross production came across the wires at +0.6 percent whereas expectations called for a 1.3 percent increase.
Falling commodity prices and declining demand for Aussie exports pose the greatest risk to Australian economic prosperity. Australia mines iron ore and then exports it to China. China then uses the raw material to produce steel which is then exported to Europe. Chinese demand has slowed and it should come as little surprise by now that the Chinese steel industry reported losses roughly of 1.98 billion yuan in July, according to China Business News. The Eurozone recession which has helped feed the Chinese slowdown has also likely begun to spill over and dampen Australian growth prospects.
The Aussie currency has lost roughly 3 percent of relative value versus the greenback since August 9.
AUD/USD, 1 Minute Chart