AUD pairs are drifting higher today in anticipation of Governor Lowe speaking about economic outlook and bank policy going forward. Aussie pairs are running as high as 1.20% at the time of writing this (AUDJPY).
The buck looks like it will remain in bullish favor up until Thursday's RBA statement. Investors are expecting a clearer picture on the bank's monetary policy after Thursday as well as some hopeful statements regarding rising annual GDP growth rate.
Australia saw the largest growth in GDP in Q2 of 2021 and slowed down in the third quarter, but GDP beat expectations in both quarters. We won't see Q4's numbers until March 2. And the low forecast leads me to believe that we could see another beat in expectations although the annual GDP growth rate has slowed considerably.
Another factor to consider is that a recovering economy could then lead to higher interest rates, according to an FXStreet article. If we take into account the possibility of higher rates in the latter half of this year, then we have to consider the possibility of investors pricing in a higher value in the buck. Lowe will probably cover that topic in depth during the meeting this Thursday.
Pairs that will probably do the best with this news would be AUD/JPY, EUR/AUD, and AUD/NZD.
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