FX.co ★ Aussie Dollar Hits 6-Week Low

The Australian dollar slipped to around $0.71, a six-week low, as weak household demand reinforced expectations that the current tightening cycle is nearing its end. Latest data showed household spending fell a sharper-than-expected 1.1% in April, with consumers cutting back on travel, clothing, and food as higher fuel costs and geopolitical uncertainty weighed on confidence.

The pullback in consumption added to evidence that restrictive monetary policy is cooling demand, even as business investment jumped 6.5% in the first quarter, driven largely by imports of data-processing equipment. Markets now widely expect the Reserve Bank of Australia to leave the cash rate unchanged at 4.35% in June, while the implied probability of a rate hike in August has more than halved to about 40%.

Earlier inflation figures also underpinned the shift in market sentiment. Headline CPI eased to 0.4% in April, bringing annual inflation down to 4.2%, partly reflecting the impact of fuel tax relief. However, core price pressures remain sticky, with underlying inflation still elevated at 3.4%—above the RBA’s 2–3% target band—signalling persistent spillovers from higher global energy costs.