The Australian dollar unexpectedly retreated after the stronger than expected first quarter GDP data was released, and its early gains fell. According to the data, Australia's GDP in the first quarter of the year was 3.3%, better than the market expectation of 3.0%, but lower than the previous value of 4.2%. After the data came out, Australia's ASX 200 index rose slightly, and the index fell by 3% on Monday.

Prior to the release of the above data today, the Australian construction permit data released yesterday was far from expected. The data in April is -2.4%, while the market is expected to be 2.0%.

The direct reaction of the Australian dollar against the US dollar seems to be more related to the strength of the US dollar than the weakness of the Australian dollar, as the Australian dollar is only slightly weaker against most other G10 currencies.

Australian dollar / dollar trend after the release of Australian GDP data

The current trend of AUD / USD seems to be more affected by the external environment. On the whole, the Ukrainian war, China's covid-19 "reset" policy and the tightening policies of major central banks are the main themes of the market.

Due to the shortage of materials caused by the war in Ukraine, the prices of bulk commodities are rising, and the solution to the conflict does not seem obvious. Although Australia's trade balance continued to improve, this did not make the Australian dollar higher against the US dollar.

The latest trade data for April will be released tomorrow. The market expects the trade surplus in April to be a $9billion. China's "zero" policy of covid-19 continues to pose risks to Global trade.

The slight relaxation of restrictions in the past few days has not eased the market's concern that Chinese ports may be easily interrupted again. Under the situation that China adheres to the "zero" policy and normal cases have occurred in other countries in the world, the market cannot see the way out for China to get rid of the epidemic at present.

Over the past few trading days, the dollar has been rising because the possibility of the Federal Reserve suspending interest rate hikes in September has encountered some obstacles. The speeches of Federal Reserve governor Waller and Atlanta Fed chairman Bostick suggested that inflation would need to fall sharply before interest rate hikes would stop.

In addition, after meeting with Federal Reserve Chairman Jerome Powell, US President Joe Biden reiterated that the Federal Reserve should be respected and reaffirmed its independence in fighting inflation.

The market interpreted his speech as a green light for positive interest rate hikes, while political commentators interpreted it as the president trying to share responsibility for the upcoming economic slowdown.

In any case, for the trend of the Australian dollar, the focus is tomorrow's trade data, but it seems that it must be a remarkable data to boost the Australian dollar.