AUSTRALIAN DOLLAR EXTENDS LOSSES AS TRADERS DIGEST US RETAIL SALES DATA
- AUD/USD shows a further decrease in Tuesday falling below 0.6730.
- Australian labor data will dictate short-term dynamics which might prompt a more hawkish RBA.
- Strong US data might not be enough to close the divergence between the Fed and RBA policies.
The Australian Dollar (AUD) continued to lose ground against the USD on Tuesday, falling to 0.6730. After an initial decline in Monday's session, the AUD has extended its losses as profit booking by investors heightens. However, the fundamental outlook hints at the AUD's potential resilience against the USD amidst monetary policy divergences between the Federal Reserve and the Reserve Bank of Australia (RBA).
Despite signs of frailty in the Australian economy, stubbornly high inflation has put the brakes on the RBA's intention of lowering interest rates. It is anticipated that the RBA will be one of the last central banks among the G10 countries to begin cutting rates, a factor that might limit the AUD's downside and extend its gains.
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