AUD / USD within a range below 0.7750 before US inflation data.

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  • AUD / USD remains defiant on the strength of the US dollar as Treasury yields rebound.
  • US-China optimism and upbeat sentiment support AUD’s perceived higher risk.
  • All attention is on the US inflation data for the next direction of the pair.

The pair AUD/USD keeps the ground higher, but remains below the 0.7750 barrier as markets await the release of US inflation data for a new directional boost.

Despite the bounce, the AUD / USD maintains its range above the 0.7700 level intact, on track to second consecutive weekly profit.

US inflation points to the Fed’s next move

Pair bulls remain resistant to widespread US dollar strength, supported by a repositioning ahead of the critical US macroeconomic release Inflation data will draw the attention of market participants as investors would assess the Fed’s next monetary policy move based on the outcome.

The odds of the Fed reducing its bond buying program have risen lately after optimistic comments from some of the US politicians and expectations of a strong economic recovery. It is likely that a stronger-than-expected US CPI release boosts hopes of a withdrawal from monetary stimulus, which in turn will have a positive impact on yields alongside the US dollar.

On the other hand, Australian dollar celebrates renewed optimism between the US and China after the Global Times reported early Thursday that China and the US trade chiefs agreed to manage their differences properly and agreed to go ahead with trade and investment ties.

AUD optimists also ignored China’s passage of the law to counter foreign sanctions. China’s Commerce Ministry praised the US removal of the WeChat and TikTok ban, saying the move is “a step in the right direction.”

Looking ahead, the pair awaits US data for a convincing move as it follows dollar dynamics and risk trends.

AUD / USD technical levels

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