Mr. Lowe also projected a strong rebound in Australian GDP in the 2nd quarter of 2011 as the nations economy recovers from the devastating floods that hit the state of Queensland at the start of this year. The floods are expected to shave as much as 1% off growth in Q1 of 2011. For that reason Australian monetary authorities have suggested that they view the current rate policy as appropriate and will therefore remain stationary for the foreseeable future as they gauge the strength of the economic rebound.
Mr. Lowe's remarks however were somewhat more hawkish as he raised his forecast for inflation from 2.5% to 3.0% by June of this year while projecting a 4.25% GDP growth in 2011. Mr. Lowe's optimistic assessment of the Australian economy may have helped to keep the Aussie bid throughout most of Asian and early European trade. The pair was boosted towards the 1.0050 level at the close of yesterday's North American session as it verticalized in a sharp short covering rally. Aussie remains well above parity in mid-morning European trade today however the pair faces stiff resistance at the 1.0070 level and unless the markets see another burst of risk appetite as the day progresses, AUD/USD is unlikely to make much forward progress from these levels as it continues to consolidate yesterday's gains.