Ella 
AUD/USD gained traction around 0.6660 during Wednesday’s trading session. The pair oscillated higher following weaker-than-expected U.S. retail sales data and a hawkish stance by the Reserve Bank of Australia at its June meeting on Tuesday.
The recent U.S. retail sales report showed signs of sluggish U.S. consumer activity, prompting the Federal Reserve to cut interest rates later this year, which broadly weighed on the dollar. Data released by the U.S. Commerce Department on Tuesday showed that U.S. retail sales rose 0.1% month-on-month in May, while retail sales recorded -0.2% in April, below the expected value of 0.2%.
Many Fed officials stressed on Tuesday that the Fed is committed to making decisions based on the incoming economic data. Boston Fed President Susan Collins warned against overreacting to “positive” economic news. Collins added that despite progress in the fight against inflation, it is too early to tell whether inflation is moving towards the Fed’s 2% target.
Meanwhile, Richmond Fed President Thomas Barkin said that the latest data showed that consumer prices did not rise at all between April and May, but that volatile economic data since last year meant that the policy path ahead was unclear. Investors are currently pricing in a rate cut from the Fed in September, with a second cut expected in December.
On the AUD side, the Reserve Bank of Australia kept its key interest rate unchanged at 4.35% for the fifth consecutive meeting in June, in line with the general expectations of market participants. The RBA decided to keep its policy unchanged because many factors need to be in place to get inflation back into range. The monetary policy statement showed that inflation remains above target and proved that inflation is still persistent, and the RBA needs to be confident that inflation is moving sustainably towards the target range. The RBA’s hawkish stance provided some support to the AUD and boosted the AUD/USD pair.
