The week ahead promises key updates despite a quiet Monday with US and UK markets closed. Australia’s CPI and retail sales data will be pivotal, as a softer CPI print could increase the chances of a rate cut in July. The RBNZ is expected to lower rates at Wednesday’s meeting, with markets eyeing further guidance.

In the US, FOMC minutes from the May 6–7 meeting may reinforce the Fed’s cautious stance, while Nvidia’s performance will be a major factor for US futures.

Key US Economic Events to Watch This Week

The US will be in focus this week with several important economic updates. Traders will be watching for the release of GDP data, the PCE price index, the minutes from the Federal Reserve’s May meeting, and consumer sentiment surveys.

The PCE report is especially important because it’s the Fed’s preferred measure of inflation. While overall CPI and year-on-year PCE have been easing, the “super core” PCE, which excludes food, energy, and housing costs, jumped 0.6% in April—the biggest increase since January 2024. If this number stays high, it could delay potential interest rate cuts by the Fed and raise worries about stagflation. This might strengthen the US dollar and put pressure on currencies like the Australian and New Zealand dollars.

Consumer sentiment, measured by the Conference Board and University of Michigan surveys, will also be closely watched. While there has been a more positive tone around trade policies, a big rise in sentiment is unlikely. Meanwhile, the release of Q1 GDP data is expected to show old numbers and may not have a big impact.

Finally, US bond yields surged last week after a weak 20-year bond auction, showing concerns about rising fiscal deficits. This has kept USD pairs stuck in tight ranges.

Overall, the data coming out this week will be important in shaping the outlook for US markets and the US dollar.

RBA Rate Cut Expectations Rise as Inflation Softens

The Reserve Bank of Australia (RBA) cut rates by 25 basis points last week, with inflation easing into the 2–3% target range and upside risks fading. Governor Michele Bullock confirmed a 50bp cut was discussed, signaling openness to more aggressive easing if data supports it.

Markets now price a 70% chance of a July cut, with 50bp fully anticipated by November. Upcoming CPI data could increase expectations for more cuts, though a tight labour market may slow the pace.

Retail sales data will also be key. Weak consumer spending has contributed little to growth, and another soft reading could further support the case for additional easing.

soft data could weigh on the Aussie Dollar if the RBA continues its dovish shift, according to market expectations.

RBNZ Set to Cut Rates as Economic Conditions Soften

The Reserve Bank of New Zealand (RBNZ) is widely expected to cut the overnight cash rate (OCR) by 25bp to 3.25% on Wednesday, marking its sixth cut in the current easing cycle. This move would widen the RBA-RBNZ cash rate spread to 60bp.

CPI is at 2.2%, well within the 1–3% target band, and while two-year inflation expectations have risen slightly to 2.29%, they remain stable and supportive of a dovish stance. Slowing job growth and rising underemployment indicate spare capacity in the economy, reinforcing the case for more easing.

Markets will focus on whether the RBNZ signals further rate cuts. If so, it could push AUD/NZD lower, as it implies the RBNZ cash rate may end below the RBA’s by year-end.

AUD/NZD Analysis Ahead of RBNZ Rate Decision

AUD/NZD has broken below its recent uptrend and is testing key support at 1.0820. A rate cut and dovish signal from the RBNZ may put downward pressure on the NZD, which could influence AUD/NZD levels based on market response.

However, bearish momentum is strong, and a break below 1.0780 could lead to further losses toward 1.0700. A move above 1.0850 could be interpreted by technical analysts as a sign of potential upside, depending on momentum indicators.

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AUTHOR

Jamie Dutta >

Jamie Dutta is a Market Analyst for Vantage. He comes with extensive experience as a full-time trader and financial market commentator, having worked as a trader in top tier investment banks and trading houses.