The Australian dollar held firm on Tuesday as both countries’ relative success in combating COVID-19 supported local sentiment in the face of a darkening global outlook. While the resurgence of the corona virus is threatening economic growth in Europe and the United States, most of Australia has little to no new cases and the country’s second-largest city Melbourne is finally re-opening having contained a major outbreak.

This relative success helped consumer confidence climb to an eight-month high, according to a weekly survey from ANZ. “People remain cautious about the current economic outlook,” said ANZ’s head of Australian economic David Plank.

And Australia’s gross domestic product growth looks likely to have turned positive in the third quarter after two back-to-back quarters of contraction, a senior central bank official said on Tuesday. As the drag from strict lockdowns in Australia’s second-largest state of Victoria was a “little less than first feared” and not enough to pull down overall GDP, said Reserve Bank of Australia (RBA) Deputy Governor Guy Debelle. Debelle was responding to questions from lawmakers at a parliamentary economics committee via video conferencing. Reporting by Swati Pandey and Wayne Cole; Editing by Sam Holmes

Reserve Bank of Australia (RBA) Deputy Governor Guy Debelle said that it looks like the third quarter recorded a positive GDP growth for the economy, as he testified along with Deputy Governor Michele Bullock before the Senate Economics Legislation Committee on Tuesday.

A jobless rate under 6% is a reasonable goal. Drag from Victoria little less than first feared, not enough to pull down GDP overall. Cannot comment on the chance of QE being announced at the RBA meeting next week.

Whereas negative news flows in for greenback –  Sales of new U.S. single-family homes fell in September after four straight monthly increases, but the housing market remains supported by record-low mortgage rates and demand for more space as the COVID-19 pandemic drags on.

AUD/USD 4 Hour Chart:

Support: 0.7101 (S1), 0.7080 (S2), 0.7058 (S3).

Resistance: 0.7145 (R1), 0.7167 (R2), 0.7189 (R3).

Australia shows improved GDP making it stronger against greenback. We expect a bullish trend for AUD/USD.