AUD/USD snaps three-day losing streak above 0.6680 ahead of RBA decision

• AUD/USD recovers some ground and currently trades around 0.6680, gaining 0.48% for the day.
• The US Core PCE Price Index came in at 4.1% annually, down from 4.6% in May and 4.2% prior.
• Australia's Retail Sales fell 0.8% MoM, against the market expectation of 0.0% and 0.7 prior.
• Investors will closely watch the RBA Interest Rate Decision and US Nonfarm Payrolls later this week.

The AUD/USD pair recovers its recent losses and snaps a three-day losing streak heading into the early European session. The Aussie trades under pressure following the US Gross Domestic Product (GDP) and Personal Consumption Expenditure (PCE) last week but gains momentum from the optimistic stimulus plan in China. Market players await the Reserve Bank of Australia's (RBA) Interest Rate Decision on Tuesday for fresh impetus. The pair currently trades around 0.6681, up to 0.48% for the day.

The Personal Consumption Expenditures (PCE) Price Index for June fell to 3% from 3.8% in May, below the market's expectation of 3.1%. Meanwhile, the Federal Reserve's preferred measure of inflation, the Core PCE Price Index, came in at 4.1% annually, down from 4.6% in May and worse than expected at 4.2%.

Furthermore, the optimistic US GDP growth in the second quarter, robust Durable Goods, and persistently constrained labor market conditions suggest that the Federal Reserve (Fed) could decide to raise additional interest rates. The US real Gross Domestic Product (GDP) expanded at a 2.4% annualized rate, above the market consensus of 1.8% by a wide margin and following the 2% growth reported in the first quarter. Durable Goods Orders rose 4.7% on a monthly basis to $302.5 billion. Initial Jobless Claims declined by 7,000 to 221,000 in the week ending July 22, marking the lowest reading in five months. The upbeat US data broadly boost the US dollar, acting as a headwind for the AUD/USD pair.

On the Australian Dollar front, the nation’s Retail Sales experienced their largest decline this year in June. Australia's Retail Sales fell 0.8% MoM, against the market expectation of 0.0% and 0.7 prior. Additionally, the Producer Price Index (PPI) data for the second quarter were disappointing at 3.9% YoY and 0.5% QoQ. This softer report indicated that rising borrowing costs and high prices have an impact on the Australian economy and that an additional hike in interest rates may not be appropriate.

About China, the State Council Information Office of China announced that Li Chunlin, vice chairman of the National Development and Reform Commission, along with officials from the Ministry of Industry and Information Technology, the Ministry of Commerce, and the State Administration of Market Regulation, will hold a press conference at 7:00 a.m. GMT to announce additional measures to boost consumption. The development of additional Chinese support to stimulate domestic consumption amid a sluggish post-COVID recovery could benefit the China-proxy Australian Dollar (AUD).

Moving on, investors will closely watch the RBA Interest Rate Decision on Tuesday. The attention will shift to the US Employment data later this week. The US Nonfarm Payrolls are expected to have created 180,000 jobs, with the unemployment rate remaining 3.6%. These events could significantly impact the US Dollar's dynamic and give the AUD/USD pair a clear direction.