Credit Agricole anticipates the Australian Retail Sales report for April, due on Friday, to have significant implications for the Australian Dollar (AUD) and the broader economic outlook.

The Reserve Bank of Australia (RBA) is keenly observing the effects of its rate hikes on household consumption. The bank has pointed out that some households still possess substantial savings that can be drawn upon, and how these savings are utilized - whether to fund consumption or make higher mortgage payments - is one of the major uncertainties surrounding the outlook for consumption and the economy.

The RBA paused its rate hikes in April, which temporarily boosted consumer sentiment. However, this pause may not have substantially impacted retail sales as sentiment remained near recession levels.

Furthermore, any significant rise in retail sales following the RBA's pause might be discounted by investors, given that the RBA surprised the markets by resuming its rate hikes in May, leading to a drop in consumer sentiment.