- AUD / USD is back from a nearly two-week high touched early Thursday.
- A softer risk tone pushes cash flows away from the perceived riskier AUD amid a renewed buy around the USD.
- The Fed’s optimistic expectations also act as a tailwind for the USD ahead of the release of the US CPI on Friday.
The pair AUD/USD is extending its steady intraday decline at the start of the American session on Thursday, staying near daily lows just below the 0.7150 level.
The pair stopped the strong recovery movement this week, from levels below 0.7000, and witnessed a course change from the region of 0.7185, or a maximum of almost two weeks, reached early this Thursday. As investors looked beyond stronger Chinese inflation figures, the emergence of new purchases around the US dollar turned out to be a key factor putting pressure on the AUD / USD pair.
Data released Thursday showed that the China’s headline CPI rose 0.4% in November and the annual rate accelerated to 2.3%, marking the fastest pace since August 2020. In addition, the IPP producer price index beat expectations and reached a year-on-year rate of 12.9%, although a combination of factors prevented investors from opening new bullish positions around the AUD / USD pair.
Mixed news on the Omicron variant of the coronavirus limited recent optimism, evidenced by a softer tone around global equity markets. This, in turn, fueled some safe-haven money flows into the USD and acted as a headwind for the higher perceived risk AUD. The USD was further supported by firm expectations of a faster tightening of monetary policies by the Fed.
In recent events, BioNTech and Pfizer They said Wednesday that a use of three doses of their COVID-19 vaccine was able to neutralize the Omicron variant in a laboratory test. This, however, was overshadowed by the fact that the Prime Minister of the United Kingdom, Boris Johnson imposed new restrictions due to COVID-19 in England on Wednesday to slow the spread of the new variant.
However, the AUD / USD pair, for now, appears to have broken three consecutive days of winning streak as investors begin to reposition themselves for Friday’s release of the Consumer CPI inflation figures in the United States. Markets have been pricing in the possibility of an eventual Fed rate hike in May 2022 amid concerns about persistent rising inflationary pressure. Therefore, the latest US CPI report will influence USD price dynamics and provide further boost to the AUD / USD pair.
Looking at today’s data, there were 184,000 initial claims for unemployment benefits in the United States during the week ending December 4, according to have revealed the data published by the Department of Labor of the United States on Thursday. This marks a new post-pandemic low. And, in fact, it’s the lowest reading since 1969.
Apart from this, the broader risk sentiment in the market will boost the USD and allow investors to seize some short-term opportunities around the AUD / USD pair.
AUD / USD technical levels
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