- AUD/USD is seen consolidating Wednesday’s post-US CPI slump to over a one-week low.
- Bets that the Fed will delay cutting rates underpin the USD and cap the upside for the pair.
- Softer Chinese inflation figures do little to influence the Aussie or provide any impetus.
The AUD/USD pair oscillates in a narrow trading range during the Asian session on Thursday and consolidates the previous day’s hotter US CPI-inspired slump to over a one-week low. Spot prices hold steady above the 0.6500 psychological mark and move little following the release of inflation figures from China.
The National Bureau of Statistics reported that China’s consumer inflation declined more than estimated, by 1% in March as compared to the previous month’s rise of 1%. On a yearly basis, the headline CPI decelerated to 0.1% from 0.7% in the previous month, missing expectations for a 0.4% increase. Furthermore, the Producer Price Index, which measures wholesale prices at the factory gate, dropped by 2.8% from a year ago, marking the 18th consecutive month of decline and indicating persistent deflationary pressures. This, to a larger extent, overshadows a jump in Australian consumer inflation expectations to 4.6% for April from 4.3% previous and does little to provide any meaningful impetus to the Aussie.
The US Dollar (USD), on the other hand, ticks lower amid some profit-taking after the previous day’s sharp spike to the highest level since November 14 and lends some support to the AUD/USD pair. Any meaningful USD corrective decline, however, still seems elusive in the wake of expectations that the Federal Reserve (Fed) will delay cutting interest rates amid sticky inflation. This, along with a generally weaker tone around the equity markets, should act as a tailwind for the safe-haven buck and cap the risk-sensitive Australian Dollar (AUD), warranting caution for aggressive bullish traders.
