FX.co ★ Aussie Dollar Slips on Disappointing Data

On Wednesday, the Australian dollar fell to approximately $0.656, erasing gains from the previous session. This decline was driven by weaker-than-expected domestic economic data, which negatively affected investor sentiment. According to the Australian Bureau of Statistics, retail sales increased by 0.2% in May, compared to a revised stagnant performance in April. However, this growth fell short of market forecasts, which anticipated a 0.4% increase. Additionally, building permits also rose less than expected, fueling concerns about a weakening economic outlook. These developments have heightened expectations that the Reserve Bank of Australia will reduce interest rates by 25 basis points to 3.60%. Market participants are increasingly anticipating further easing in the latter half of the year, which may potentially bring the cash rate down to 3.10% or even 2.85%, a level considered to be stimulative. Concurrently, the Australian dollar received some support as the US dollar hovered near multi-year lows, driven by growing speculation of Federal Reserve rate cuts and uncertainty surrounding President Trump's proposed spending bill.