Australia's retail sales miss forecast, Aussie slips

[Redator]

The Australian dollar is lower on Thursday. In the Europen session, AUD/USD is trading at 0.6556, down 0.41% on the day.

Australia's retail sales lower than expected at 0.2%

Australia's retail sales posted a small gain of 0.2% in May, up from a flat reading in April but shy of the consensus of 0.4%. The gain was driven by a strong rebound in sales in clothing and footwear, while food sales declined. On an annual basis, retail sales rose 3.3%, down sharply from 3.8% in April and the weakest pace of growth in six months.

RBA expected to trim next week

Today's weak data has bolstered expectations that the Reserve Bank of Australia will lower rates at next week's meeting. The money markets have priced in a cut at 97%, which would lower the cash rate to 3.6%.

Consumers have been holding back on spending and the Reserve Bank will be counting on a rate cut to boost Australia's weak economy. That strategy hasn't worked as well as hoped; the RBA has lowered rates twice since February but first-quarter growth was weak and consumers haven't been spending.

Inflation is under control and CPI dropped to 2.1% in May, down from 2.4% and the lowest level since Oct. 2024. With inflation largely contained, the Reserve Bank can deliver a rate cut without too much concern about the upside risk to inflation.

US nonfarm payrolls expected to drop to 110 thousand

It's an abbreviated week in the US due to the Fourth of July holiday on Friday. The US will release the June employment report on Thursday, with all eyes on nonfarm payrolls.

Nonfarm payrolls eased slightly in May to 137 thousand from 147 thousand and the downward trend is expected to continue, with a consensus of 110 thousand for June. This would mark the weakest pace of job growth since 2020, with the exception of a meltdown in job growth in Oct. 2024.

AUDUSD Technical

• AUD/USD has pushed below support at 0.6567 and is testing support at 0.6555. Below, there is support at 0.6540
• There is resistance at 0.6582 and 0.6594

AUDUSD 4-Hour Chart, July 2, 2025

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