Aussie Retail Sales Influence the RBA Rate Path
Shifting to the AUD/USD pair, Aussie retail sales figures may influence the RBA rate path. Retail sales increased by 0.1% in September, weaker than a 0.7% rise in August. Reduced consumer spending could dampen demand-driven inflation, supporting a Q4 2024 RBA rate cut.
Significantly, the retail sales figures followed Wednesday’s Aussie inflation data. While headline inflation softened sharply, underlying inflation remained above the RBA’s 2-3% target range.
Expert Views on the RBA Rate Path
AMP Head of Investment Strategy and Chief Economist Shane Oliver remarked on Wednesday’s inflation figures, stating,
“The Mthly CPI Indicator shows the fall in inflation continued in Sept with headline infl of 2.1%, trimmed mean inflation falling to 3.2%yoy & the proportion of CPI items with infl<2%yoy way above those with inflation >3%yoy. If this continues in Oct it could drive a Dec RBA cut.”
China Private Sector PMIs Put the Aussie Economy in Focus
Later this morning, NBS private sector PMIs could affect sentiment toward the Australian economy. Upward trends in the Manufacturing PMI may signal a pickup in demand, potentially boosting the Aussie economy.
Australia has a trade-to-GDP ratio of over 50%, with one-third of its exports bound for China. Economists predict the NBS Manufacturing PMI will increase from 49.8 in September to 50.0 in October.
Australian Dollar Daily Chart
In Thursday’s US session, inflation will be the focal point. A softer Core PCE Price Index could raise expectations for Fed rate cuts in November and December. A more dovish Fed rate path could drive the AUD/USD toward $0.66. Conversely, sticky inflation could dampen bets on a December Fed rate cut, potentially dragging the AUD/USD below $0.65550.
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