The Australian dollar remains subdued since monthly retail sales fall in April

• The Australian dollar maintains losses after the disappointing economic data published on Friday.
• Australian retail sales fell 0.1% monthly in April, compared to the expectations of staying constant with an increase of 0.3%.
• The US dollar fights due to commercial uncertainty and mixed economic data of the USA.

The Australian dollar (AUD) slides against the US dollar (USD) on Friday, going back their recent earnings from the previous session. The aud/USD pair remains content after the publication of disappointing economic data of Australia.

Australia’s unstacted retail sales decreased 0.1% month by month in April, compared to the expectations of being constant with a growth of 0.3%. Meanwhile, monthly construction permits fell by 5.7%, compared to the expected increase of 3.1%.

The Aud/USD continues to receive downward pressure after a panel of three judges in the International Trade Court in Manhattan stopped the US president, Donald Trump, to impose “Liberation Day” tariffs. The Federal Court determined that Trump exceeded his authority by imposing broad import tariffs and declared that the executive orders issued on April 2 were illegal. However, Trump seems unlikely to go back, publishing in his application of social social networks that is in a “mission of God.”

In the nearby commercial partner of Australia, China, Securities Times reports that analysts believe that the Popular Bank of China (PBOC) could increase supplementary pignado financing (PSL). This movement would offer low -term financing to policy banks, which in turn support sectors prioritized by the Government such as housing, urban reurbing and large infrastructure projects.

The Australian dollar depreciates despite a weaker US dollar amid commercial uncertainty and mixed data

• The American dollar index (DXY), which measures the value of the dollar against six main currencies, is extending its losses for the second consecutive day and quoting around 99.20 at the time of writing. The US dollar (USD) depreciated after the publication of mixed economic data from the United States. The operators will probably observe the report of the Personal Consumption Expenditure Index (PCE) of the US, scheduled to be published on Friday.
• The gross domestic product (GDP) preliminary annualized contracted 0.2% in the first quarter, slightly better than the expected fall of 0.3%. Personal consumption expenses (PCE) remained constant with an increase of 3.6% quarter to quarter in the first quarter, as expected. Meanwhile, the underlying PCE rose 3.4% intertrmetral compared to the expected increase of 3.5%.
• The US Department of Labor (DOL) reported that initial unemployment subsidy applications in the US for the week that ended on May 24 increased to 240K, worse than the 226K of the previous week (reviewed from 227K). This figure exceeded the 230k market consensus. In addition, continued applications for unemployment subsidy increased by 26K to reach 1.919M for the week ending on May 17.
• The minutes of the Federal Open Market Committee (FOMC) of the last policy meeting, published on Wednesday, indicated that Federal Reserve (FED) officials agreed that the high economic uncertainty justified their patient approach to interest rates settings. Fed officials emphasized the need to maintain interest rates without changes for some time, since recent policy changes cloud the US economic perspectives.
• The US fiscal deficit could increase even more when Trump’s “great law” is on the way to the Senate for vote, increasing the risk that bond yields stay high for longer. Higher bond yields can maintain the highest indebtedness costs for consumers, companies and governments. The Trump bill is expected to increase the deficit at 3.8 billion dollars, since it would provide tax cuts on tips for tips and cars manufactured in the US, according to the Congress Budget Office (CBO).
• The American senator Ron Johnson told CNN on Sunday that “I think we have enough votes to stop the process until the president takes seriously the reduction of spending and reducing the deficit.” Johnson added: “My main approach is now spending. This is completely unacceptable. Current projections are a deficit of 2.2 billion dollars per year.”
• Moody’s degraded the US credit rating of AAA1, after similar degradations by Fitch Ratings in 2023 and Standard & Poor’s in 2011. Moody’s now projects that the federal debt of the US will reach around 134% of GDP by 2035, compared to 98% in 2023, with the budget deficit that is expected to be expected Expand almost 9% of GDP. This deterioration is attributed to the increase in debt service costs, the expansion of rights programs and the fall in tax revenues.
• The Trump administration has stopped some sales of aircraft, semiconductor and certain chemical products to China. The New York Times cited two familiar sources saying that this action is an answer to the recent export restrictions of China on Critical Minerals to the US.
• The AU could face challenges as the Bank of the Australian Reserve (RBA) is expected to carry out more rates cuts in the next policy meetings. The Central Bank recognized advances in the containment of inflation and warned that commercial barriers between the US and China represent downward risks for economic growth. Governor Michele Bullock stated that the RBA is prepared to take additional measures if economic perspectives deteriorate drastically, increasing the possibility of future feat cuts.

The Australian dollar is maintained below the nine -day EMA near the 0.6450 barrier

The Aud/USD torque is negotiating around 0.6430 on Friday, indicating a potential weakening of the bullish bias. The technical analysis of the daily chart suggests that the torque is floating around the lower limit of the ascending channel. The impulse of the short -term price is weakened as the torque remains below the nine -day exponential (EMA) mobile average. However, the 14 -day relative force index (RSI) is positioned slightly above the 50 -mark, suggesting that a bullish bias remains active.

The Aud/USD torque could test the immediate barrier in the nine -day EMA of 0.6439, followed by 0.6537, a maximum of six months recorded on May 26. A rupture above this crucial resistance zone could rekindle the bullish bias and support the torque to approach the upper limit of the upward channel around 0.6640.

At the bottom, a break below the channel could lead to the AUD/USD to try the 50 -day EMA at 0.6385. A rupture below this level could weaken the impulse of the price in the medium term and exert down pressure over the torque to approach 0.5914, the lowest level since March 2020.

AUD/USD: Daily graphic