- AUD/USD consolidates above 0.6500 as the focus shifts to US inflation data.
- The Fed is expected to cut interest rates in May.
- The Australian Dollar will dance to the tunes of the Employment data.
The AUD/USD pair trades in a narrow range above the psychological support of 0.6500 in the early New York session. The Aussie asset struggles for a direction as investors await January’s United States Consumer Price Index (CPI) data for fresh guidance.
S&P500 futures display a subdued performance before the opening of US markets. The US Dollar Index (DXY) extends its recovery to 104.20 as investors are cautious ahead of US inflation data, which will be published on Tuesday.
According to the estimates, the headline inflation grew at a slower pace of 3.0% against 3.4% in December. In the same period, core inflation that excludes volatile food and oil prices decelerated slightly to 3.8% from 3.9%. The monthly headline and core inflation rose steadily by 0.2% and 0.3%, respectively.
The continuation of progress in the underlying inflation declining towards the 2% target will increase the odds of a rate cut by the Federal Reserve (Fed). As per the CME Fedwatch, the chances of a rate cut by 25 basis points (bps) in the March monetary policy meeting are small. While for the May meeting, traders see a 53% chance for a rate cut by 25 bps that will push key rates in the range of 5.00-5.25%.
On the Australia Dollar front, investors will focus on the Australian Employment data for January, which will be released on Thursday. Investors anticipate Australian employers hiring 30K workers against 65.1K lay-offs in December. The Unemployment Rate rose to 4% from 3.9% a month ago.
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD holds ground after Chinese import data shows rise in April
The AUD/USD continues its losing streak, trading around 0.6580 on Thursday following the Reserve Bank of Australia's less hawkish stance, especially after last week's inflation data exceeded predictions. Nevertheless, the RBA acknowledged that recent progress in controlling inflation has stalled, maintaining its stance of keeping options open.
USD/JPY holds positive ground above 155.50 following the BoJ Summary of Opinions
The USD/JPY pair trades in positive territory for the fourth consecutive day around 155.60 during the Asian trading hours on Thursday. However, the fear of further intervention from the Bank of Japan is likely to cap the downside of the Japanese Yen for the time being.
Gold price gains ground, investors await US data, Fedspeak for fresh catalyst
Gold price trades with a positive bias on Thursday amid the absence of top-tier economic data releases at mid-week. However, multiple headwinds, such as the firmer US Dollar and the hawkish comments from the US Federal Reserve are likely to cap the upside of the precious metal in the near term.
President Biden threatens crypto with possible veto of Bitcoin custody among trusted custodians
Joe Biden could veto legislation that would allow regulated financial institutions to custody Bitcoin and crypto. Biden administration’s stance would disrupt US SEC’s work to protect crypto market investors and efforts to safeguard broader financial system.
US inflation data in the market purview
With next week's pivotal US inflation data looming, we're witnessing a stall in stock market momentum and an uptick in US Treasury yields. This shift comes amid murmurs of hawkish sentiment from Fed speak.