29/05/2026
The Australian dollar fell to around 0.71, hitting a six-week low, as weak household demand exacerbated expectations that policy tightening was nearing its end. Data showed that household spending fell more than expected by 1.1% in April, with consumers reducing spending on travel, clothing, and food, while higher fuel costs and geopolitical uncertainty weighed on confidence. This decline further suggests that restrictive monetary policy is suppressing demand, even as business investment surged 6.5% in the first quarter, primarily driven by imported data equipment. The market widely expects the Reserve Bank of Australia to keep interest rates at 4.35% in June, while the probability of an August rate hike has halved to 40%. Early inflation data also supported the shift in sentiment, with the overall consumer price index (CPI) falling to 0.4% in April and the annual inflation rate slowing to 4.2%, partly due to fuel tax relief. However, core inflation remained high at 3.4%, still above the Reserve Bank of Australia's target range, reflecting the continued spillover effects of rising global energy costs.
