• AUD/USD moves higher to near 0.6800 despite flat Aussie Retail Sales data for July.
• The RBA is unlikely to pivot to policy normalization this year.
• Investors await the US core PCE inflation for July and Caixin Manufacturing PMI for August.

The AUD/USD pair gains to near 0.6800 in Friday’s European session. The Aussie asset rises as the Australian Dollar (AUD) remains firm even though the Australian Retail Sales were reported flat in July in Asian trading hours, and China’s Manufacturing PMI is expected to have contracted consecutively for the second month in August.

The Australian Bureau of Statistics reported on early Friday that there was no growth in Retail Sales in July, while economists forecasted them to rise at a slower pace of 0.3% from 0.5% in June. Flat Retail Sales appear to be the outcome of the lower spending power of households due to high inflation and the restrictive monetary policy stance of the Reserve Bank of Australia (RBA).

Despite a slowdown in Australian consumer spending, the RBA is unlikely to cut interest rates sooner as its battle against inflation appears to be much more fierce than what other nations are facing. Recent inflation data showed that the monthly Consumer Price Index (CPI) decelerated to 3.5% from 3.8% in June but remained higher than estimates of 3.4%. According to the market speculation, the RBA is expected to keep its Official Cash Rate (OCR) at 4.35% by the year.