The Australian dollar threatens to weaken against the greenback after the Reserve Bank of Australia's first-quarter GDP reading, according to Commonwealth Bank economists. The bank now expects flat growth in the January-March period, marking a downgrade from previous forecasts. Markets are pricing in potential RBA tightening, but softer economic data could force a reassessment of that stance.

Economist Kristina Clifton notes that consensus estimates still project 0.5% GDP growth for the quarter. However, CBA's downward revision suggests the currency may be vulnerable if official figures confirm the weakness. The Aussie last traded around 0.7179 per U.S. dollar ahead of the data release scheduled for 11:30 a.m. Sydney time.

If the GDP figures disappoint, currency markets could strip out some of the anticipated interest rate hike premium currently built into Aussie dollar pricing. This would put additional downward pressure on AUD/USD, potentially pushing the pair lower in afternoon trading. Investors are watching for signs of economic momentum in the commodities-heavy economy.

The data holds significant weight for Australia's monetary policy trajectory, with the RBA balancing inflation concerns against growth headwinds. A flat or negative reading would strengthen the case for maintaining current interest rates, directly impacting the currency's carry trade appeal.