The Australian Dollar (AUD) dropped briefly after a lower-than-expected GDP figure but quickly bounced back. Strong private demand and steady consumption played a key role in this recovery. As of the latest update, the AUD/USD was at 0.6575, with growth driven by private investment and household spending. Private investment increased by 0.5%, the highest growth since Q1 2021, while household consumption rose by 0.3%. Public demand also contributed to growth, thanks to government spending and investment, each adding 0.2%. However, net trade and reduced inventories slightly hindered GDP growth.

Economic Recovery Is Expected

The Australian Bureau of Statistics reported that mining inventories fell due to increased demand for coal exports, although mining production slowed after a strong previous quarter. A steady economic recovery is expected to continue into the first half of 2026, mainly fueled by domestic demand. This includes strong household consumption, a recovery in services, and increased housing activity. The AUD has regained its previous losses, showing bullish momentum on daily charts. Resistance levels are estimated at 0.6610/40 and up to 0.67, while support lies at 0.6550 and 0.6510. We see today’s weaker GDP figure as a temporary setback, not a change in trend for the Australian dollar. The currency’s quick rebound above 0.6570 suggests that the market is focusing on the strength in private investment and household spending rather than the headline miss. This domestic resilience is crucial for our outlook into early 2026. Ongoing strong consumer spending is backed by a tight labor market. The November 2025 jobs report showed unemployment steady at a low 4.1%. Additionally, October 2025’s monthly CPI reported inflation at 3.8%, leaving the Reserve Bank of Australia with little room to ease policy. This firm stance supports a stable foundation for the AUD. The factors weighing on growth, like net trade and inventories, seem to be temporary rather than indicative of overall weakness. The reduction in mining inventories aimed to meet high export demand, which is a positive sign. Furthermore, iron ore prices have stabilized around $125 per tonne, indicative of healthy external demand that should normalize in the next few quarters.

Derivative Traders Suggested Strategy

For derivative traders, this implies a bullish outlook in the coming weeks. We recommend buying call options or call spreads on the AUD/USD with strike prices targeting the 0.6640 to 0.6700 resistance levels. This strategy is further backed by differing monetary policies, as the US Federal Reserve seems to have reached the peak of its hiking cycle while the RBA is expected to remain firm. If we see a break below the 0.6550 support level, and particularly the 21-day moving average near 0.6510, it would signal a need to reevaluate this bullish stance. This pattern resembles previous periods in 2023 when headline growth was often overshadowed by volatile external accounts, while domestic factors remained strong. Focusing on domestic data will be essential moving forward. Create your live VT Markets account and start trading now.

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