Australia's Q4 GDP grew by 0.8%, surpassing the expected 0.6% and marking a stronger-than-anticipated recovery. Annual GDP growth accelerated to 2.6% from 2.1% in the prior quarter, reflecting a sustained rebound from mid-2024 lows. However, components like final consumption expenditure slowed to 0.5%, and the GDP chain price index rose to 1.4%, signaling inflationary pressures. The Reserve Bank of Australia (RBA) faces a dilemma as robust growth and rising prices may delay rate cuts and even prompt further hikes. The mixed data could pressure AUD/USD despite the GDP beat, as markets focus on the RBA's policy response. While strong growth supports the case for higher rates, slowing consumption and inflation risks complicate the outlook. Traders should monitor RBA statements and inflation data for clues on future rate decisions, with AUD/USD likely to remain volatile amid shifting policy expectations. For MENA investors, the Australian data underscores global economic resilience and central bank policy uncertainty. Gulf traders with exposure to AUD/USD may need to hedge against potential RBA tightening, while commodities-linked assets could face indirect pressure if rate hikes curb demand. Key watchpoints include upcoming RBA meetings and Australia's inflation trajectory.
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