- AUD/USD fails to cheer mildly positive market mood amid contrasting inflation data from China.
- Pause in US Treasury bond buying favor Antipodeans, stock futures.
- RBA’s Kent reiterate weak inflation expectations until 2024, praises growth momentum, Westpac Consumer Confidence slumps.
- Cautious sentiment poses downside risk ahead of the key Thursday.
AUD/USD eases from an intraday top of 0.7745 while flashing a 0.03% intraday loss following China’s inflation data release on early Wednesday. In doing so, the Aussie pair portrays sluggish moves amid mixed catalyst and cautious sentiment ahead of the key Thursday.
China’s headline Consumer Price Index (CPI) eased below 1.6% YoY forecast to 1.3% but the Producer Price Index (PPI) jumped the highest since 2008 while marking a 9.0% rally versus 8.5% expected.
Read: Chinese CPI disappoints, PPI rises at fastest pace since 2008
Earlier in the day, Australia’s Westpac Consumer Confidence for June dropped below -4.8% previous readouts to -5.2%. However, the cautious optimism of RBA Assistant Governor (Financial Markets) Christopher Kent favored the pair buyers.
RBA’s Kent cited “Good prospects for growth, eventual increase in wages and inflation,” while expecting sluggish inflation until 2024. The policymaker also said, “Policy measures have delivered, will continue to deliver, very stimulatory monetary conditions.”
It should be noted that Australia’s Treasury Secretary Josh Frydenberg also spoke positively for the Oz nation’s economic recovery and offered an additional reason for the quote’s latest consolidation moves.
In addition to the upbeat catalysts at home, AUD/USD also reacts to the pause in the US Treasury yields’ downside, which in turn pulls the US dollar back.
US Senate’s passage of a bill aiming to compete with China gains the top seat among the fresh risk-related headlines. On the same line was the Financial Times (FT) piece saying, “Covid outbreak in China sparks fears of trade disruption.” Additionally, chatters over the US President Joe Biden’s infrastructure spending also added to the market players’ confusion amid anxiety over the Fed’s next moves.
Amid these plays, US 10-year Treasury yields seesaw around 1.53% while S&P 500 Futures also refrain from moving off 4,225-30 area. On the contrary, Australia’s ASX 200 prints mild gains of 0.20% by the press time.
Moving on, AUD/USD traders will keep their eyes on the challenges to market sentiment for fresh impulse amid a light calendar.
Technical analysis
An upside clearance of 21-day SMA level near 0.7750 becomes necessary for AUD/USD bulls to extend the recovery moves towards the 0.7800 threshold. However, any further upside will have multiple challenges near 0.7820. On the contrary, pullback moves may re-test 50-day SMA around 0.7725, a break of which could drag the quote towards the 0.7700 round-figure ahead of highlighting multiple levels marked since early April near 0.7675.
