- AUDUSD looks to take trades above 0.6500 amid a lively market environment.
- US core CPI data will continue to be the focus for further guidance on US monetary policy.
- A decline in China’s CPI will accelerate the chances of a dovish policy from the PBOC.
The pair AUDUSD it has turned sideways above the psychological resistance at 0.6500 in the early Asian session. Late in the American session, the asset rebounded after receiving buying interest around 0.6480. The rally in S&P 500 futures indicated that the risk profile remains strong and market participants have bought dips.
Meanwhile, the dollar index (DXY) has rebounded modestly after hitting a fresh seven-week low at 109.36. 10-year US Treasury yields have fallen to 4.13% amid talk of less aggressive monetary policy by the Federal Reserve (Fed) in December.
But first, investors are focused on the release of the US Consumer Price Index (CPI) data due out on Thursday. According to estimates, headline inflation will stand at 8.0%, compared to the previous release of 8.2%. Weakening gasoline prices continually weigh on the headline inflation rate, as oil is a key component.
The core CPI, which excludes oil and food prices, stands at 6.5%, slightly below the previous release which was 6.6%. The absence of promising signs of exhaustion in core CPI has continued to be a major factor, pushing Fed interest rates full throttle.
On the Australian front, investors are awaiting the release of CPI data from China. The annual inflation rate looks lower, at 2.4% vs. 2.8% previously reported. A easing of inflationary pressures will trigger expectations for more stimulus packages and dovish comments from the People’s Bank of China (PBOC). It should be noted that Australia is one of China’s major trading partners and the PBOC’s policies have a significant impact downstream.
Source: Fx Street
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