Aussie dollar shoots to 1-week high on GDP surprise

The Australian dollar shot up on Wednesday after first quarter gross domestic product numbers came in much higher than expected.

AUD/USD jumped to 0.7821, its highest since 26 May, from the previous close of 0.7774. The pair had a more than 2% rally on Tuesday when the US currency lost ground on weak data and dovish Fed comments.

Technically, the pair is facing some resistance in the 0.7800 region which if broken, the next level to look at will be 0.7890 and then 0.7940 ahead of the 0.8000 mark. A break of that will open doors to the May peak of 0.8165.

Australian economy expanded 0.9% quarter on quarter in the first three months of the year, much higher than the 0.5% growth of the previous quarter and beating market expectations of 0.7%.

On a year-on-year basis, the rate was down to 2.3% from December quarter's 2.5% but came much better than predictions averaged 2.1%.

The market is now waiting for the European Central Bank rate decision due later in the day even as the single currency mostly holds the previous day's gains amid optimism that Greece will be able to strike a deal with its creditors.

Weaker than expected factory orders data and Fed member Brainard's comments that the second quarter recovery for the US economy would be challenged with more headwinds had weakened the greenback across the board.

Earlier on Wednesday, a services sector index by Australia Industry Group (AIG) showed that in May, the sector performed almost in line with the previous month's performance. The index recorded 49.6 down from the April reading of 49.7.