The Australian dollar is on course to snap a two-day winning run after risks of Australia recording another negative growth quarter — which seemed to have abated — intensified following a bigger-than-expected current account deficit.
The Aussie fell to a session low of 74.58 US cents after the data. A short while ago, it was 0.3% below Monday’s close at 74.64 US cents. It had risen more than 1.5% in the previous two sessions.
The current account deficit fell by $403 million to $3.108 billion in the March quarter, leaving it at the narrowest level since the September quarter of 2001. However, that compared with consensus expectations for a $500 million deficit.
Net exports could now slice 0.7 percentage points off real GDP growth during the March quarter, much higher than the 0.4 percentage point contraction that had been expected.
That level assumes significance as economists are forecasting a tiny increase in real GDP. And this data increased the odds that a negative figure could eventuate.
A negative figure and continued weakness in economic data could draw the RBA back to the interest rate cutting party, which would weaken the currency.
Australia releases Q1 GDP on Wednesday.