AUD Hits 6-Week Low
The Australian dollar fell to around US$0.71, hitting a six-week low, as weak domestic demand data reinforced market confidence that the policy tightening phase is nearing its end. This pressure arose as investors assessed the impact of restrictive interest rates beginning to be more clearly felt on household consumption.
Data showed that household spending fell 1.1% in April, deeper than expected, driven by cuts in spending on travel, clothing, and food. Rising fuel costs and geopolitical uncertainty also weighed on consumer confidence, adding to signs that purchasing power is weakening amidst cost-of-living pressures.
The weakening consumption reinforced the narrative that tight monetary policy is "cooling" demand. However, business investment rose 6.5% in the first quarter, driven primarily by purchases of imported equipment, so the decline in demand was uneven and more concentrated on the household side.
The market now widely expects the Reserve Bank of Australia to hold interest rates at 4.35% in June, while the odds of a hike in August are said to have dropped to around 40%. This repricing reflects a reduced urgency for further tightening amid signs of slowing consumption.
On the inflation front, previous data also supported the shift in sentiment: headline CPI rose 0.4% in April, and annual inflation slowed to 4.2%, helped by fuel tax incentives. However, core (underlying) inflation remained high at 3.4% and remained above the RBA target, reflecting spillovers from still-high global energy costs. (asd)
Source: Newsmaker.id
