Here is what you need to know on Tuesday, June 18:

The Australian Dollar (AUD) stays resilient against its major rivals early Tuesday as markets assess the Reserve Bank of Australia (RBA) policy announcements and Governor Michele Bullock's comments. ZEW Survey for Germany and the Eurozone will be featured in the European economic docket. Later in the day, Retail Sales and Industrial Production data from the US will be watched closely by market participants.

Following the conclusion of its June policy meeting on Tuesday, the RBA board members decided to keep the Official Cash Rate (OCR) unchanged at 4.35%, as widely expected. "Inflation is easing but has been doing so more slowly than previously expected and it remains high," the RBA noted in its policy statement and added that they expect that it will be some time before inflation is sustainably in the target range. In the post-meeting press conference, Governor Bullock said that policymakers discussed whether to hike rates at the meeting and said that they wanted to make a point that they are alert to upside risks to inflation. AUD/USD edged higher following the RBA event and was last seen rising 0.3% on the day at 0.6630.

USD/CAD HOLDS KEY SUPPORT OF 1.3700 AHEAD OF US RETAIL SALES

18 June 2024, 10:20

USD/CAD holds its key support of 1.3700 with eyes on monthly US Retail Sales data for May.
While the Fed advocates one rate cut this year, traders have priced in two.
The BoC may extend its policy-easing spell in July.

The USD/CAD pair remains well-supported above the round-level cushion of 1.3700 in Tuesday’s European session. The Loonie asset holds gains as the US Dollar (USD) rebounds after a slight corrective move. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, clings to gains above 105.00 as Federal Reserve (Fed) policymakers continue to advocate for one rate cut this year.

Fed officials have acknowledged the cooler-than-expected consumer and producer inflation reports but don’t want to rush to reduce interest rates before they see inflation declining for months to gain significant confidence.

Contrary to the Fed’s latest interest rate projections, market speculation for two rate cuts this year have strengthened. The CME FedWatch tool shows that the rate-cut process will begin from the September meeting and there will be subsequent rate cuts in the November or December meeting.

Meanwhile, investors shift focus to the United States (US) Retail Sales data for May, which will be published at 12:30 GMT. The Retail Sales data—a key measure of consumer spending—is estimated to have increased by 0.3% after remaining stagnant in April. Robust consumer spending indicates a stubborn inflation outlook and will diminish hopes of rate cuts in September, while soft numbers will do the opposite.

AUSSIE EDGES HIGHER ON HAWKISH RBA HOLD, FOCUS SHIFTS TO US DATA