AUD/USD Flat As Hawkish RBA Remains On Hold

The Australian dollar was flat against the U.S. dollar on Thursday. The hawkish stance of the Reserve Bank of Australia at its June meeting on Tuesday is likely to continue to support the pair. In addition, weaker-than-expected U.S. retail sales fueled expectations of a rate cut by the Federal Reserve this year, which could weigh on the dollar and boost AUD/USD.

However, the RBA’s statement noted that the economic outlook remains uncertain and the process of keeping inflation within the target range is unlikely to be smooth sailing. Traders will get more clues from the preliminary reading of the Australian Judo Bank Purchasing Managers’ Index (PMI) for May, which will be released on Friday. Any signs of weakness in the Australian economy could prompt the RBA to lower borrowing costs, dragging the Australian dollar lower.

In the U.S., investors will focus on the U.S. initial jobless claims, building permits, housing starts, the Philadelphia Fed manufacturing index and a speech by Fed official Neel Kashkari, which will be released on Thursday. On Friday, the preliminary report of the U.S. S&P Global Purchasing Managers’ Index for June will be in focus.

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