AUD/USD corrects to near two-month low around 0.6500 ahead of US/China CPI data
|- AUD/USD cracks swiftly to near a two-month low around 0.6500 amid strength in the US Dollar and China’s bleak economic growth.
- US annualized headline inflation is expected to bounce back to 3.3% vs. the former release of 3.0%.
- The Chinese economy struggles to push inflation higher due to weak domestic demand and vulnerable exports.
The AUD/USD pair witnesses a sharp correction amid strength in the US Dollar Index (DXY) and a weakness in China’s business with other nations. The Aussie asset cracks to near a two-month low around 0.6500 and is expected to continue its downside momentum amid caution ahead of a busy economic calendar.
S&P500 futures extend losses in the European session, portraying a buildup of caution among market participants ahead of the United States Consumer Price Index (CPI) data, which will be published on Thursday. The US Dollar Index climbs above the 102.40 resistance as investors hope for stubbornness in CPI’s July reading due to a recovery in global oil prices.
Oil price recovery would elevate gasoline prices and the contribution of cheap oil to consistently softening headline price pressures would start fading. As per the estimates, annualized headline inflation is expected to bounce back to 3.3% vs. the former release of 3.0%. This would ease hopes of no more interest rate hikes from the Federal Reserve (Fed) by the year-end.
But before that, investors will focus on China’s inflation data, which will be released on Wednesday at 01:30 GMT. Monthly CPI is expected to deliver a stagnant performance against a deflation of 0.2%. On an annual basis, inflation is expected to report a deflation by 0.5% against a neutral figure. Producer Price Index (PPI) would continue to remain in the deflation territory, however, the pace of would ease to -4% against the former release of -5.4%.
The Chinese economy struggles to push inflation higher despite monetary and fiscal stimulus due to weak domestic demand and vulnerable exports. It is worth noting that Australia is the leading trading partner of China and weak economic prospects in China impact the Australian Dollar.
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.