AUD/USD weakens around 0.6500 while the US dollar earns despite the weak IPP

• The Australian dollar (AUD) extends its fall against the US dollar (USD) per fourth consecutive session.
• The AUD/USD quotes about 0.6500 during the American session, lowering more than 1% in the week.
• The general IPP remained flat in June, while the underlying IPP was also below expectations.

The Australian dollar (AUD) extends its loss streak against the US dollar (USD) for fourth consecutive session on Wednesday, pressed by the renewed strength of the dollar. The US dollar advances despite the data of the US Production Price Index (IPP) softer than expected, since the operators remain cautious about the persistent inflationary concerns and the growing tariff threats of the United States.

The aud/USD is going down during American negotiation hours. At the time of writing, the PAR is quoted near the level of key psychological support of 0.6500, lowering more than 1% so far this week. Meanwhile, the US dollar index (DXY), which measures the performance of the dollar against a basket of six main currencies, reaches a new three weeks, staying around the 98.80 mark.

The US IPP data published on Wednesday were softer than expected, reinforcing the moderation signals of inflation at the level of producers. The general IPP remained flat in monthly terms in June, failing in the forecasts of an increase of 0.2% and slowing down from the previous increase of 0.3%. In annual terms, the IPP was reduced to 2.3% from 2.6% in May.

Meanwhile, the underlying IPP, which excludes food and energy, was printed at 0.0% intermensual compared to 0.2% expected and fell to 2.4% interannual from 2.6%.

Despite the weakest data, the markets seemed to ignore the downward surprise, since the operators remained focused on the last report of the Consumer Price Index (IPC), which showed that inflation remains persistent. The caution comments of the Federal Reserve officials have also maintained the expectations of an imminent rate cut under control. Combined with the increase in global commercial tensions, these factors are helping to support the US dollar despite the softer reading of the IPP.

On the Australian side, the weak economic data continue to press the Australian dollar. Consumer confidence remains low, with the Anz-Roy Morgan index, falling more deeply into negative territory in July. The economy grew only 0.2% in the first quarter, showing signs of deceleration. At the same time, inflation has cooled and is now close to the lower end of the 2-3% target of the Australian Reserve Bank (RBA). These signals have increased the market expectations that the RBA could cut interest rates in their next meeting.

Facing the future, all eyes will be placed in the Australian employment report and US retail sales data, both scheduled for Thursday. Australian employment figures could influence the next movement of the Australian Reserve Bank, especially if the data indicate greater weakness in the labor market. Meanwhile, US retail sales will provide new perspectives on consumer spending. Strong numbers could further support the US dollar, while weaker data could relieve part of the upward pressure.