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AUD/USD edges lower after registering slight gains in the previous session, trading around 0.6680 during the Asian hours on Thursday. The pair loses ground after Australia’s Consumer Inflation Expectations were released. The January reading edged down to 4.6% from 4.7% in the previous month, indicating that households continue to anticipate elevated price pressures.

The Reserve Bank of Australia (RBA) kept the cash rate unchanged at 3.6% for a third consecutive meeting in December. Policymakers acknowledged that inflation has eased markedly from its 2022 peak, although recent data point to renewed momentum. Headline inflation slowed to 3.4% YoY in November, the lowest since August, but it remains above the RBA’s 2–3% target range.

The US Census Bureau reported on Wednesday that Retail Sales rose more than expected to $735.9 billion in November, up 0.6%, following a 0.1% contraction in October and beating market expectations of a 0.4% increase. Meanwhile, the Producer Price Index (PPI) came in hot in November, with both headline and core measures reaching 3% year-over-year (YoY). Traders will monitor the weekly US Initial Jobless Claims report later on Thursday, alongside remarks from Federal Reserve officials.

Data released last week showed the US Unemployment Rate edged lower to 4.4% in December. Together, these releases strengthen the case for the US Federal Reserve (Fed) to keep interest rates on hold for the next several months, potentially lending support to the US Dollar (USD). Morgan Stanley analysts subsequently pushed back their expectations for rate cuts to June and September from January and April, following Friday’s jobs report.

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