Ella 
AUD/USD managed to pare the day’s losses and extend its gains on Thursday. The AUD/USD currency pair continues to face challenges due to soft Australian consumer inflation expectations and retail sales data. These factors have bolstered expectations that the Reserve Bank of Australia (RBA) will consider a rate cut in the second half of 2024. Additionally, weakness in Australia’s monthly consumer price index released on Wednesday also supported this view.
Australian consumers’ expectations for future inflation rose by 4.3% in March, down slightly from the previous reading of 4.5%. Retail sales fell to a seasonally adjusted monthly rate of 0.3% in February, below expectations of 0.4% and the previous reading of 1.1%. Separately, Australia’s consumer price index, released on Wednesday, rose 3.4% year-on-year in February, in line with previous levels but slightly below expectations of 3.5%.
The U.S. dollar index (DXY) appears to have paused its two-day winning streak, heading lower in anticipation of U.S. personal consumption expenditures (PCE) data due on Friday. However, the recent rise in U.S. Treasury yields may have provided support for the U.S. dollar (USD) amid mixed views among Federal Open Market Committee (FOMC) members on monetary policy easing.
