AUD/USD clings to 0.6960 as traders await RBA’s Kent, China CPI for fresh clues

  • Aussie catches a breath amid mixed sentiment, fewer data.
  • RBA’s Kent, China CPI could offer fresh directives.

While mixed domestic data and improvement in global risk tone helped the Aussie to avoid losses on Tuesday, the AUD/USD pair remains modestly changed to 0.6960 ahead of the speech from RBA’s Assistant Governor and China inflation data on early Wednesday.

Despite the US President Donald Trump’s threats to China, Mexico, and the Federal Reserve, global risk tone held unaffected. The US 10-year treasury yield, a macro barometer of risk, grew close to 1 basis point to 2.145% by the Tuesday-end.

Traders gave less importance to the President Trump’s tweets as they have been too frequent off-late and also because of the optimism that the upcoming G20 will kick-start the trade talks between the world’s two largest economies that are deadlocked recently.

Reserve Bank of Australia’s (RBA) Assistant Governor (Financial Markets) Christopher Kent will offer the initial direction to today’s Aussie moves before Westpac consumer confidence (June) and China’s consumer price index (CPI), together with producer price index (PPI), for May month propel the price momentum.

Following the recent rate cut from the Aussie central bank, investors may seek fewer clues concerning further such moves from the RBA. However, dovish comments by the policymaker might not refrain from dragging the pair down.

The private consumer sentiment index previously flashed 0.6% mark whereas China’s PPI is expected to soften to 0.6% from 0.9% prior. However, the expected increase in headline CPI from Australia’s largest customer, China, to 2.7% from 2.5% could please the Aussie buyers.

The US CPI data for May is also expected to entertain market players later today. Headline CPI may soften to 0.1% from 0.3% prior while CPI ex-food and energy can rise to 0.2% from 0.1% on an MoM basis.

Technical Analysis

An upside clearance of 50-day simple moving average (SMA) level of 0.7015 becomes necessary for the pair to aim for 0.7050 and 100-day SMA level of 0.7065, failing to which can recall 0.6940, 0.6900 and 0.6860 on the chart.

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