The strongest currencies today are the AUD and the USD (DXY just hit session highs). The AUD has been the strongest this week after the RBA met this week and were far more neutral than dovish. The cash rate was kept at 0.10% as expected. The QE program is set to remain at $4 billion per week until mid February 2022. Furthermore, the RBA noted that the Omicron variant is a new ‘source of uncertainty’, but it is not expected to derail the recovery. The economy is expected to return to its pre-Delta path in the first half of 2022. In context of a heavily sold AUD this can allow some of those stretched short positions to recover.
If we see a miss on US CPI expectations then AUDUSD should fly.
