- AUD/USD extends losses by 10 pips following the release of dismal consumer spending data.
- The focus is now on the RBA. The central bank is widely expected to cut rates by 25 basis points today.
The AUD/USD pair is extending losses in response to below-forecast Aussie retail sales figure released at 01:30 GMT.
As of writing, the currency pair is trading at 0.6965, representing a 0.20% drop on the day, having hit a session low of 0.6959 soon before press time.
Consumer spending, as represented by the seasonally adjusted retail sales, dipped 0.1% month-on-month in April, missing the expected rise of 0.2%, following a 0.3% gain in March.
The current account deficit narrowed to A$2.9 billion in the first quarter from the previous quarter’s A$7.2 billion print. The actual figure, however, was higher than the expected deficit of A$2.5 billion.
The soft consumer spending number will likely reinforce expectations the RBA would cut rates three times this year. It is worth noting that markets are fully priced in for two rate cuts of which one is widely expected to come through today at the policy meeting, scheduled at 04:30 GMT.
With the 25 basis point rate cut already priced in, the AUD/USD may post solid gains above 0.6977 during the day ahead, unless the RBA sends out of a strong dovish signal, forcing markets to price in the possibility of three rate cuts this year.
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