Australian Dollar Dips To One Week Low Amid Slightly Cautious Comments On Monetary Policiy By RBA

Published on Jul 19, 2023 12:25

The Australian Dollar has remained slippery against the US dollar this week after hitting a one month high of 0.6900 as the US Dollar index has shown sustained buying support around 15 month low and the Reserve Bank Of Australia or RBA stated yesterday that economic growth in Australia had slowed considerably, reflecting the impact of higher interest rates and high inflation. GDP increased by 0.2 per cent in the March quarter and growth was expected to be similar in the June quarter; output growth was well below the estimated rate of increase in the population over the same period.

The central bank also noted that timely indicators pointed to a gradual easing in inflation over the first half of 2023. The monthly CPI indicator for headline inflation had eased to 5.6 per cent in year-ended terms in May. Across most components of the basket, the year-ended rate of inflation had eased over the preceding three months. The central bank now indicates that some further tightening of monetary policy may be required to bring inflation back to target within a reasonable timeframe, but that this depended on how the economy and inflation evolve.

This slightly cautious observation is tilting the Australian Dollar lower and the AUDUSD pair is currently lingering at 0.6799, down 0.40% on the day- testing around one week low. A steady reading on the US retail sales also supported the US currency. The Commerce Department said retail sales edged up by 0.2 percent in June after climbing by an upwardly revised 0.5 percent in May. Excluding a modest increase in sales by motor vehicles and parts dealers, retail sales still rose by 0.2 percent in June after rising by an upwardly revised 0.3 percent in May.