While the release of the national accounts will show the economy likely finished 2022 in relatively good shape, growth is expected to slow considerably from here. This is outlined in the RBA's updated forecasts in the February Statement of Monetary Policy and is part of the RBA's plan to tame inflation and cool the labour market.

"Growth in activity has moderated since the first half of 2022, and the outlook continues to be for slower GDP growth this year and next, at around 1½ per cent... The effects of higher interest rates, the rapidly increasing cost of living and declining real wealth are all expected to weigh on demand in the period ahead."

Impact on markets

• Presuming the Q4 GDP release is mostly as expected (+0.7%QoQ), it will have only a limited impact on markets and little impact on the current path of RBA policy
• Should the GDP come in significantly stronger than expected, equal to or >1%QoQ, it would likely raise concerns that the economy's underlying momentum is stronger than originally thought and would require a higher RBA peak Terminal Rate. The ASX 200 would likely fall, and the AUD/USD would rally
• Conversely, should the GDP come in significantly weaker than expected, equal to or < 0.4%QoQ, it would indicate the economy is slowing more quickly than expected, and it will ease the RBA's rate hike expectations. This would likely be a positive development for the ASX 200 and a negative development for the AUD/USD.

What comes next for the AUD/USD?

In our most recent article on the AUD/USD here, we moved to a positive bias after the pair reached support at .6800c.

"Leaning against the strong support in the .68/67c region, we are moving to a mild positive bias looking for a retest and break of the February .7157 high."

The reasons for this were based on a combination of technical and macro analysis.

At a technical level, the view has been the correction from the February .7157 high should base on the .68/67c support area. The macro reasons include the tailwinds of a firm labour market and high inflation, which bring upside risks to the RBA's peak rate as well as China’s re-opening, which is positive for growth, commodities, and by extension the AUD/USD.

Adding to this, we are now in Australian Resource Company dividend repatriation season, which will likely see ~A$12 billion of Aussie dollars bought to pay dividends to Australian shareholders.

Technically, the AUD/USD needs to continue holding support at .6700/80 and rebound above the 200-day moving average at .6800/20 to keep the positive bias in place.

AUD/USD daily chart