In the second quarter of 2026, Australia’s GDP experienced a growth of 0.4% on a quarter-over-quarter basis, surpassing the consensus forecast of 0.3%. The US Dollar appreciates as US Treasury yields increase and oil prices surge. In July, US JOLTS job openings did not meet expectations, whereas ISM Manufacturing continued to show signs of expansion. After reversing its daily losses, AUD/USD is now trading at about 0.7150 during Asian hours on Wednesday. The pair appreciates as the Australian Dollar gains ground following the release of domestic Gross Domestic Product data for the second quarter, which grew by 0.4% quarter-on-quarter, picking up pace from the 0.3% expansion recorded in the first quarter and surpassing market expectations of 0.3%.
Australia’s second-quarter GDP grew by 2.1% year-over-year. While this indicates a deceleration from the 2.5% growth observed in Q1, the outcome significantly exceeded the market consensus forecast of 1.8%. The upside of the AUD/USD pair may face limitations as the US Dollar strengthens, propelled by increasing bond yields and soaring oil prices that have rekindled worries about ongoing inflation and possible interest rate increases. A global bond selloff has driven the US 10-year Treasury yield to 4.80%, marking its highest level since early 2025. In a further contribution to inflationary pressures, crude oil prices surged due to intensifying hostilities between the United States and Iran, which heightens the risks of disruptions in energy flows from the Middle East.
Economic data from the US presented a varied landscape for market sentiment. In July, job openings as reported by JOLTS increased to 7.27 million, although this figure fell short of market expectations. In August, the ISM Manufacturing PMI experienced a decline, decreasing to 54.6 from the previous figure of 55.6. Despite falling short of projections, the reading remains solidly within expansion territory and continues to indicate a robust manufacturing sector.
Strategists highlight that Bessent has “pushed back against claims that rising Treasury yields reflected mounting concerns over US fiscal policy,” pointing instead to the recent “outperformance of US 10-year Treasuries relative to other major bond markets.” However, they caution that such relative strength “does not make the fiscal risk disappear,” warning that rising interest expense will ultimately “push up the US Treasury term premium,” leaving the USD “more vulnerable to periods of fiscal stress.”
