AUD to USD Forecast: RBA Press Conference and US Retail Sales Impact Ahead

The RBA Interest Rate Decision and Press Conference

The RBA interest rate decision and press conference on Tuesday (June 18) will impact buyer demand for the AUD/USD.

Economists expect the RBA to stand pat on Tuesday. Barring a surprise RBA interest rate hike, investors should focus on the RBA Press Conference.

In May, RBA Governor Michele Bullock poured cold water on speculation of an RBA interest rate hike. A deviation from the need for vigilance about high inflation would affect near-term trends for the Aussie dollar.

Recent labor market data sent mixed signals. The Australian unemployment rate fell from 4.1% to 4.0% in May, but job ads slid by 2.1% following a 2.3% fall in April.

Interpretation of the numbers may be pivotal. Concerns about the labor market could lead investors to raise bets on a 2024 RBA rate cut.

Weaker labor market conditions could affect wage growth and reduce disposable income. In an elevated interest rate and inflation environment, downward trends in disposable income could adversely impact loan servicing and household spending.

US Economic Calendar: US Retail Sales and the Fed

Later in the session on Tuesday, US retail sales figures could impact investor bets on a September Fed rate cut.

Economists forecast retail sales to increase by 0.3% in May after stalling in April. Furthermore, economists expect retail sales ex-autos to rise by 0.2% after an increase of 0.2% in April.

Hotter-than-expected numbers could reduce investor bets on a September Fed rate cut. Upward trends in consumer spending may fuel demand-driven inflation. A higher-for-longer Fed rate path could raise borrowing costs and reduce disposable income. Downward trends in disposable income may curb consumer spending and dampen demand-driven inflation.

In addition to the retail sales data, investors should also pay close attention to FOMC member commentary. Views on the economic outlook, inflation, and the timing of an interest rate cut could move the dial. FOMC members Thomas Barkin, Susan Collins, Adriana Kugler, Alberto Musalem, and Austan Goolsbee are on the calendar to speak.

Short-Term Forecast

Near-term AUD/USD trends will depend on the RBA press conference, US retail sales data, and FOMC member chatter. An unexpected fall in US retail sales and dovish FOMC member chatter could tilt monetary policy divergence toward the US dollar. However, RBA Governor Michele Bullock must follow her previous comments on interest rates to drive buyer demand for the Aussie dollar.

AUD/USD Price Action

Daily Chart

The AUD/USD hovered above the 50-day and 200-day EMAs, confirming the bullish price trends.

An Aussie dollar return to the $0.66500 handle could signal a climb to the $0.67003 resistance level. A break above the $0.67003 resistance level could give the bulls a run at $0.67500.

The RBA, US retail sales, and FOMC Member commentary require consideration.

Conversely, an AUD/USD fall through the 50-day EMA could signal a drop to the 200-day EMA and the $0.65760 support level.

With a 14-period Daily RSI reading of 49.08, the AUD could break below the $0.65500 handle before entering oversold territory.