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• AUD/USD drifts higher around 0.6660 in Wednesday’s early Asian session. 
• US Retail Sales came in weaker than expected, rising 0.1% MoM in May from a 0.2% drop in April.
• The RBA left the cash rate at 4.35% on Tuesday, as widely expected. 

The AUD/USD gains traction near 0.6660 during the trading hours on Wednesday. The pair edges higher after the weaker-than-expected US Retail Sales data and hawkish hold from the Reserve Bank of Australia (RBA) at its June meeting on Tuesday. 

The recent US Retail Sales report suggested signs of subdued activity among US consumers, prompting the case for US Federal Reserve (Fed) rate cuts later this year, which weakened the Greenback broadly. The US Retail Sales increased 0.1% on a monthly basis in May from a 0.2% drop in April, below the consensus for a rise of 0.2%, according to the Commerce Department on Tuesday.

Many Fed officials on Tuesday highlighted the Fed's commitment to making decisions based on incoming economic data. Boston Fed President Susan Collins warned against overreacting to "promising" economic news. Collins added that despite progress on inflation, it is still too early to say whether or not inflation is on course towards the Fed’s 2% target. 

Meanwhile, Richmond Fed President Thomas Barkin, said the recent data showed consumer prices did not rise at all from April to May, but the choppiness in data since last year means the policy path ahead is not clear. Investors are now pricing in a first-rate cut in September, with a second rate cut expected in December.

On the Aussie front, the RBA left the key interest rate unchanged at 4.35% for the fifth consecutive meeting in June, as widely anticipated by market participants. The central bank decided to stay the course on policy as it needed a lot to go its way to bring inflation back to range. The monetary policy statement showed that inflation remains above target and is proving persistent and the RBA needs to be confident that inflation is moving sustainably towards the target range. The hawkish hold from the RBA provides some support for the AUD and creates a tailwind for the AUD/USD pair. 

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