The FX market has been waiting all morning for the speech by RBA Deputy Governor Phil Lowe on Productivity and Infrastructure on the expectation he would decry the high Aussie dollar.
Instead, in the one reference to the exchange rate in his speech, he actually highlighted that there is some upside for the economy from the recent persistent strength. That is, a high Aussie is making Australian companies more competitive.
On the positive side, we have seen some signs that productivity growth has picked up a bit recently. Many firms that we talk with – particularly those affected by the high exchange rate – report that they have made serious efforts over recent years to make their operations more efficient.
Great news for the economy, especially if the RBA succeeds in its efforts to drive the Aussie dollar lower.
Greg McKenna is an active currency trader and is currently long the Aussie dollar.