Australian Dollar bounces up, US Dollar droops ahead of US Retail Sales data
- AUD/USD picks up to 0.7070 from Thursday's lows at 0.7045.
- Hawkish comments from RBA's Kent have provided some support to the Aussie.
- The US Dollar remains on the defensive, following benign US inflation figures this week.
The Australian Dollar (AUD) is trading a tad firmer against the Dollar (USD) on Friday, fuelled by hawkish remarks by Reserve Bank of Australia’s (RBA) Assistant Governor, Chris Kent. The AUD/USD pair is trading near 0.7070 at the time of writing, up from Thursday’s lows at 0.7045 as the US Dollar loses momentum heading into the release of July’s US Retail Sales figures.
RBA’s Kent affirmed in a Reuters interview that interest rates are restrictive and working but that inflationary risks remain high, leaving the door open for further monetary tightening in the near-term.
These comments follow a hawkish hold by the Australian central bank earlier this week. Governor Michelle Bullock affirmed that the committee left interest rates unchanged to wait for “a bit more information” but that a rate hike is still top of mind, which has boosted bets of a tightening move at September’s meeting.
Fed tightening hopes fade
The US Dollar, on the other hand, is trimming previous gains against its main peers on Friday, as US producer prices data released on Thursday confirmed the view of moderating price pressures. The softer-than-expected Producer Price Index (PPI) figures follow a rather benign Consumer Price Index (CPI) report seen earlier in the week, which, coupled with the decline in July's Nonfarm Payrolls data released last Friday, has hammered hopes that the Federal Reserve (Fed) will hike interest rates in September.
The focus on Friday turns to the US Retail Sales Report. Analysts at Danske Bank highlight that "private consumption was the most important growth driver in Q2," and that July's reading will be "the first hard data evidence of whether the strength also continued into late summer."
The market consensus anticipates a 0.1% uptick in retail consumption in July, following a 0.2% gain in June. Later on the day, the University of Michigan's Consumer Sentiment Survey is expected to show a mild deterioration to 54.5 in August from 55.2 in July, with persistently high prices and growing labour concerns hurting buyers' confidence.
Economic Indicator
Retail Sales (MoM)
The Retail Sales data, released by the US Census Bureau on a monthly basis, measures the value in total receipts of retail and food stores in the United States. Monthly percent changes reflect the rate of changes in such sales. A stratified random sampling method is used to select approximately 4,800 retail and food services firms whose sales are then weighted and benchmarked to represent the complete universe of over three million retail and food services firms across the country. The data is adjusted for seasonal variations as well as holiday and trading-day differences, but not for price changes. Retail Sales data is widely followed as an indicator of consumer spending, which is a major driver of the US economy. Generally, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.
Read more.Next release: Fri Aug 14, 2026 12:30
Frequency: Monthly
Consensus: 0.1%
Previous: 0.2%
Source: US Census Bureau
Retail Sales data published by the US Census Bureau is a leading indicator that gives important information about consumer spending, which has a significant impact on the GDP. Although strong sales figures are likely to boost the USD, external factors, such as weather conditions, could distort the data and paint a misleading picture. In addition to the headline data, changes in the Retail Sales Control Group could trigger a market reaction as it is used to prepare the estimates of Personal Consumption Expenditures for most goods.
Economic Indicator
Michigan Consumer Sentiment Index
The Michigan Consumer Sentiment Index, released on a monthly basis by the University of Michigan, is a survey gauging sentiment among consumers in the United States. The questions cover three broad areas: personal finances, business conditions and buying conditions. The data shows a picture of whether or not consumers are willing to spend money, a key factor as consumer spending is a major driver of the US economy. The University of Michigan survey has proven to be an accurate indicator of the future course of the US economy. The survey publishes a preliminary, mid-month reading and a final print at the end of the month. Generally, a high reading is bullish for the US Dollar (USD), while a low reading is bearish.
Read more.Next release: Fri Aug 14, 2026 14:00 (Prel)
Frequency: Monthly
Consensus: 54.5
Previous: 55.2
Source: University of Michigan
Consumer exuberance can translate into greater spending and faster economic growth, implying a stronger labor market and a potential pick-up in inflation, helping turn the Fed hawkish. This survey’s popularity among analysts (mentioned more frequently than CB Consumer Confidence) is justified because the data here includes interviews conducted up to a day or two before the official release, making it a timely measure of consumer mood, but foremost because it gauges consumer attitudes on financial and income situations. Actual figures beating consensus tend to be USD bullish.
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