Australia’s economy shrank by 0.5% in Q3 2016, worse than a growth rate of 0.2% that was expected. Australia has seen very quarters of contraction since it last had a recession 25 years ago. The economy of the land down under previously squeezed in 2008 but that bout, as well as others, never lasted more than one quarter.

The read is the worst since early 2011. Year over year, the economy is still growing: 1.8%, yet this is lower than expected as well. Basically most GDP components dragged it down.

The silver lining is that this Q3 contraction came on top of an upwards revised Q2: the economy grew by 0.6% back then. Is this a one-off blip after a great quarter? According to analysts, Q4 is expected to be better than Q3.

AUD/USD dropped from near 0.75 to nearly 0.74, but managed to stabilize. Support awaits at 0.7365, followed by 0.73. Looking up, 0.75 is a line of resistance.

Here is the chart: