• AUD/USD recovered much of its previous losses in Tuesday’s session, following RBA decision.
• USD started the week softly, and its declines extended following weak Retail Sales figures.
• If the Fed and RBA policies diverge, the Aussie might see further gains.

The Australian Dollar (AUD) witnessed sizable gains against the US Dollar (USD) following Tuesday’s Reserve Bank of Australia (RBA) meeting, which concluded with a hawkish hold.

Despite the underlying weakness in the Australian economy, stubbornly high inflation has prompted the RBA to postpone rate cuts. On the US side, disinflation signals have boosted confidence in a September interest rate cut by the Federal Reserve (Fed).