This Wednesday, just one week before the highly anticipated June RBA Board meeting, Australian Q1 2022 GDP is set to drop.
Due to the devastating floods in NSW and QLD and the Omicron outbreak at the start of the year, Q1 GDP is expected to rise by just 0.2%qoq, with annual growth decelerating from 4.2% to 2.5%yoy.
Digging into the details, trade is expected to detract from growth while investment and consumption are expected to contribute. The household savings rate, which hit 19.8% in Q3 2021 due to lockdowns, is expected to see another drop from 13.6% in Q4 2021 to 10% in Q1 2022 as consumers continue to open their wallets and shop up a storm.
The slowdown in the first Q1 of 2022 is not representative of what lays ahead for the Australian economy for the rest of 2022. According to the RBA’s updated forecasts in the recently released Statement of Monetary Policy,
“The Australian economy remains resilient and is expected to grow strongly this year. GDP is forecast to expand by 4¼percent over 2022. Growth is expected to moderate thereafter, to 2percent over 2023.”
Turning to the currency, the ability of the AUDUSD to bounce back above .7100c leaves the short sell off below .7000c exposed as an ugly false break lower. Supported by resilient commodity prices, a rebound in stocks and prospects of more RBA rate hikes, we look for the recovery in the AUDUSD to extend towards the 200-day moving average at .7260.
Source Tradingview. The figures stated are as of May 30th, 2022. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation