AUD/USD has ticked higher in the Friday session. Currently, the pair is trading at 0.6994, up 0.08% on the day. On the fundamentals front, the RBA released its quarterly monetary policy statement. In the U.S., the focus remains on inflation indicators, with the release of consumer inflation reports. CPI is expected to remain steady at 0.4%, while the core reading is projected to rise from 0.1% to 0.2%.

The RBA released its quarterly policy statement on Thursday, sending a pessimistic message to the markets. The bank downgraded its GDP forecast to 2.75%, down from 3.0% in February. Inflation remains low, and the RBA rate statement, released on Tuesday, said that the labor market would have to improve before inflation could reach the bank’s target of 2.0%. The RBA has been dovish about the economic outlook, and thus surprised the markets when it did not lower the key interest rate earlier this week. Despite the cloudy economic outlook, rate-setters are hopeful that the limping economy can rebound without the help of a rate cut.

The trade war between the U.S. and China has taken a heavy toll on the Chinese economy. China’s trade surplus fell sharply in April, dropping from 221 billion yuan to 94 billion ($32.6 billion to $13.8 billion). As well, Chinese exports declined 2.7% in April, on a year-to year basis. This was a sharper drop than the estimate of a 2.3% decline. A slowdown in China has damaged the Australian economy, as China is Australia’s number one trading partner.

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