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27 May 2024 | FXGT.com

AUD/USD Maintains Strength Above $0.66 Ahead of Upcoming Retail Sales and Inflation Data

Australian Dollar Stabilizes Above $0.66: The Australian dollar held steady above $0.66 amid low liquidity due to the U.S. holiday, as investors await key domestic retail sales and inflation data later this week. These figures will significantly influence the Reserve Bank of Australia’s (RBA) monetary policy outlook.

RBA Meeting Minutes: The latest RBA meeting minutes revealed that the board considered raising interest rates in May but ultimately chose to maintain the current policy. The board acknowledged the difficulty in predicting future rate changes, noting that recent data had increased the risk of prolonged above-target inflation. The market is currently pricing in a 35% chance of one rate cut in December.

Upcoming Australian Economic Data: Australia’s retail sales data on Tuesday and monthly inflation figures on Wednesday are key local data highlights. The Bank of Australia expects consumer price inflation to hold steady at 3.5% in April, while economists forecast a slight easing to 3.4%. Retail Sales data is expected to show 0.3% growth in April, rebounding from a 0.4% decline in March.

Global Influences: Geopolitical tensions, such as reports of Chinese military activity in the Taiwan Strait, and developments in China’s semiconductor industry, could impact the Australian market due to close trade ties.

Impact of US Economic Data: The Australian dollar has recently been pressured by strong US economic data and hawkish Federal Reserve meeting minutes, which have dampened expectations for US rate cuts. Additionally, the US Census Bureau reported a 0.7% increase in Durable Goods Orders for April, while the S&P Global US Composite PMI surged to 54.4 in May, indicating strong economic activity and postponing expectations of any immediate rate cuts by the Federal Reserve.

Upcoming U.S. Inflation Data: Friday’s core personal consumption expenditures (PCE) price index reading, the Federal Reserve’s preferred inflation measure, is expected to be steady month-on-month. A slowdown in consumer price rises in April had previously weakened the dollar, and further confirmation of this trend could continue to pull it lower.

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