ECB Signals Possible Interest Rate Move if Inflation Outlook Fails to Improve 
Bank of Korea Signals Potential Interest Rate Hikes as Inflation Remains Elevated 
BOJ Rate Hike Expectations Grow as Board Member Signals Hawkish Stance 
RBA Raises Interest Rates to 4.35% Amid Rising Inflation Risks and Middle East Tensions 
Paraguay Holds Interest Rate at 5.5% as Inflation Remains Stable Amid Global Uncertainty 
Eurozone Recession Risks Rise as Middle East Conflict Threatens Growth, ECB Official Warns 
Bank of England Set to Hold Interest Rates as Inflation Risks and Iran War Impact Loom 
Fed’s Goolsbee Warns Inflation Remains Elevated, Signals Caution on Rate Cuts 
RBA Rate Hike Outlook: Impact on AUD/USD and ASX 200 
Australian retail sales numbers have disappointed the streets, actual prints are at -0.1% where consensus was at 0.3% in Feb with consumer sentiment slipping back into 'cautiously pessimistic' territory in Dec-Feb. Jan retail sales grew by 0.4%, the lift following a soft end to 2016. The recent pattern has been driven by significant moves in 'household goods' retail due to the closure of the Masters Home Improvement chain.
Consequently, AUDUSD contained in a 0.7600-0.7700 range.
AUDUSD in medium term perspectives: At the risk of testing 0.7800 during the next few weeks as USD longs are pared. Longer term we expect to see it slightly lower to around 0.7600. A steady hand from the Fed in June plus an optimistic RBA should limit downside on AUDUSD during the next few months.
Further out, though, the underlying AUD trend should be gently lower, as growing bulk commodity supply gradually cools the 2016 price surge. Iron ore should be back under $80/tonne by June, with further (modest) declines likely in H2 2017.
