AUD/USD clings to CPI-inspired gains near 0.69
|- Annual CPI in Australia rises to 1.6% in second quarter.
- Positive headlines on US-China trade talks support antipodeans.
- FOMC is expected to announce a 25 basis points rate cut later today.
After closing the previous ten days in the negative territory, the AUD/USD pair gained traction and finally staged a decisive recovery boosted by the inflation data from Australia. With the market action turning subdued ahead of the day's key events, the pair is clinging to its daily gains a tad below the 0.69 mark, adding 0.35% on a daily basis.
Earlier today, the Australian Bureau of Statistics reported that inflation, as measured by the Consumer Price Index (CPI), rose to 0.6% on a quarterly basis in the second quarter after staying flat in the first quarter and improved to 1.6% on a yearly basis to beat the market expectation of 1.5%. With this data suggesting that the Reserve Bank of Australia could pause rate cuts to keep inflation under control helped the Aussie gather strength.
Moreover, several news outlets reported that sides had construction discussions in Tuesday's high-level US-China trade negotiations, reviving hopes of the trade conflict coming to an end and allowing trade-sensitive antipodeans to find demand.
Fed is set to cut policy rate by 25 basis points
Meanwhile, the US Dollar Index continues to move sideways in the upper half of this week's range above 98 while investors are gearing up for the FOMC's policy announcements. Previewing the event, "The market currently fully prices a 25bp cut and implies a 16% chance of a larger 50bp cut," said Deutsche Bank analysts. "Although the Fed have given no real encouragement to the notion of a 50bps cut it’s worth noting that the last time the Fed began a series of rate cuts, in September 2007, their opening move was a 50bp cut, and a similar 50bp cut happened when the Fed began cutting in January 2001.”
Technical levels to watch for
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.