AUD/USD holds below the 0.6400 mark ahead of the Australian CPI

The AUD/USD pair remains under selling pressure and drops below 0.6400 during the early Asian session on Wednesday. The pair is weighed by the negative sentiment and a decline in commodity prices. The pair currently trades around 0.6394, losing 0.03% on the day.

Meanwhile, the US Dollar Index (DXY), a measure of the value of the USD relative to a basket of foreign currencies, hovers around 106.17 after retreating from the highest level since November of 106.26.

On Tuesday, the US Consumer Confidence released by the Conference Board (CB) for September rose by 103.0 from 108.7 in August. The data indicated the impact of higher interest rates and concerns about the political environment. The Building Permits came in at 1.541M in August versus 1.443M prior. Additionally, the House Price Index for July climbed to 0.8% MoM from 0.4% in the previous reading, better than expected at 0.5%. New Home Sales dropped -8.7% in August from an 8% increase in July.

The Federal Reserve (Fed) decided to hold the interest rate unchanged in the 5.25% to 5.50% range last week. In terms of macroeconomic predictions, most members still expect further rate rises later this year. Minneapolis Federal Reserve Bank President, Neel Kashkari stated on Tuesday that he is one of the fed policymakers who sees one more rate hike this year. He added that US rates probably have to go a little bit higher and be held there for longer, to cool things off. The hawkish comments from Fed officials boost the US Dollar (USD) across the board and act as a headwind for the AUD/USD pair.

On the other hand, the Aussie attracts some sellers due to risk aversion. The release of Australian Consumer Price Index (CPI) data will be a closely watched event. The release of the Reserve Bank of Australia's (RBA) Minutes on the September monetary policy meeting revealed that additional tightening may be necessary if inflation proves more persistent than anticipated. But the case for maintaining the status quo was stronger. This, in turn, might cap the upside of the Aussie and weigh on the AUD/USD pair.

Market participants will closely watch the Australian Consumer Price Index (CPI) data for August due later on Wednesday. The annual figure is expected to rise from 4.9% to 5.2%. Also, the US Durable Goods Orders report will be released on Wednesday. The attention will shift to the Core Personal Consumption Expenditure (PCE) Price Index, the Fed's preferred measure of consumer inflation, due on Friday. The annual figure is expected to drop from 4.2% to 3.9%. Traders will take cues from the data and find trading opportunities around the AUD/USD pair.