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Australian Dollar Drops Amid Soft GDP Data, Trade Worries

The Australian dollar fell against its major counterparts in the Asian session on Wednesday, as a data showed that the economy expanded less than forecast in the third quarter as well as on receding hopes for an imminent deal following U.S. President Donald Trump's remarks.

Data from the Australian Bureau of Statistics showed that Australia's GDP rose a seasonally adjusted 0.4 percent on quarter in the third quarter of 2019.

That was shy of expectations for an increase of 0.5 percent and down from 0.6 percent in the previous three months.

On a yearly basis, gross domestic product climbed 1.7 percent - in line with expectations and up from 1.4 percent in the three months prior.

Optimism about an imminent U.S.-China trade deal faded after U.S. Donald Trump said that a trade agreement with China might have to wait until after the 2020 presidential elections.

Adding to trade concerns, Trump threatened to impose duties of up to 100 percent on $2.4 billion in French imports, including champagne and handbags.

The aussie dropped to a 2-day low of 74.06 against the yen, from a high of 74.46 hit at 7:00 pm ET. The next possible support for the aussie is seen around the 72.5 level.

Survey from Jibun Bank showed that Japan services sector moved back into expansion in November, albeit barely, with a PMI score of 50.3.

That's up from 49.8 and it moves back above the boom-or-bust line of 50 that separates expansion from contraction.

The aussie edged lower to 0.6821 against the greenback and 1.6236 against the euro, off its early highs of 0.6854 and 1.6170, respectively. The next likely support for the aussie is seen around 0.67 against the greenback and 1.65 against the euro.

The Australian currency fell to 1.0472 against the kiwi, its weakest since August 13. If the aussie slides further, it may find support around the 1.03 level.

Reversing from a high of 0.9109 set at 7:15 pm ET, the aussie declined to 0.9066 against the loonie. The aussie is seen locating support around the 0.89 region.

Looking ahead, PMI reports from major European economies are due in the the European session.

At 8:15 am ET, ADP private payrolls data for November is set for release.

The Bank of Canada's interest rate decision is scheduled for release at 10:00 am ET. Economists expect the benchmark rate to be kept unchanged at 1.75 percent.

Simultaneously, ISM services PMI for November will be featured.

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