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• AUD/USD trades in positive territory for three straight days near 0.6715 in Thursday’s early European session. 
• The upbeat Australian economic data fueled arguments that the RBA could raise interest rates again. 
• The cautious stance from the Fed officials might help limit the USD’s downside.

The AUD/USD pair gathers strength around 0.6715 during the early European session on Thursday. The uptick of the Australian Dollar (AUD) is bolstered by the encouraging Retail Sales data for May, which spurred the case for a rate hike by the Reserve Bank of Australia (RBA).

Australia’s Retail Sales growth was stronger than expected in May, fueling to arguments that the Australian central bank could raise interest rates as early as August. The nation’s Retail Sales rose 0.6% MoM in May from the previous reading of a 0.1% increase, according to the Australian Bureau of Statistics (ABS) on Wednesday. Additionally, the rise of Aussie is attributed to the Judo Bank's Australia Purchasing Managers Index (PMI) reports, which improved slightly in June.

On the other hand, the weaker-than-expected US economist dada continues to drag the Greenback lower. The US Services PMI declined to 48.8 in June from 53.8 in the previous reading, below the market consensus of 52.5, the Institute for Supply Management (ISM) showed on Wednesday. 

However, the cautious stance from the Federal Reserve (Fed) officials might lift the USD and cap the pair’s upside. Chicago Fed President Austan Goolsbee said early Thursday that getting inflation back to 2% will take time and there is still much data to be had on the economy. 

Meanwhile, the minutes of the FOMC June monetary policy meeting showed that the Fed officials lacked the confidence they needed to cut the interest rate. “Some participants emphasized the Committee’s data-dependent approach, with monetary policy decisions being conditional on the evolution of the economy rather than being on a preset path,” the minutes showed. Financial markets are now pricing in a nearly 66% chance for a 25 basis points (bps) Fed rate cut in September, up from 63% on Tuesday, according to the CME FedWatch tool. 

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