AUD/USD slides to near 0.6470 as US Dollar gains, PCE Inflation in focus

AUD/USD drops to near 0.6470 as the US Dollar rises after Fed Cook’s lawsuit announcement.
Investors expect Trump’s attempt to politicize Fed had dampened US Dollar’s dominance.
Inflation in Australia grew at a faster-than-expected pace of 2.8% in July.

Sagar Dua FXStreet

The AUD/USD pair falls to near 0.6470 during the European trading session on Wednesday. The Aussie pair declines as the US Dollar (USD) attracts bids after Federal Reserve (Fed) Governor Lisa Cook announced that she will file a lawsuit against her termination by United States (US) President Donald Trump on Monday.

At the time of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.44% higher to near 98.65.

However, the outlook of the US Dollar has become uncertain as doubts among investors over the credibility of the Fed going forward have increased.

Market experts believe that decisions on interest rates from Fed Cook’s replacement would be biased towards US President Trump’s economic agenda.

On the economic front, investors await the US Personal Consumption Expenditure Price Index (PCE) data for July, which will be released on Friday. The core PCE inflation data, which is closely tracked by Fed officials as it excludes volatile food and energy items, is expected to have grown at an annual pace of 2.9%, faster than the prior release of 2.8%.

Meanwhile, the Australian Dollar fails to attract bids even as Australian Monthly Consumer Price Index (CPI) data for July has come in stronger-than-projected. The inflation data rose at an annual pace of 2.8%, faster than expectations of 2.3% and the prior reading of 1.9%.

Economic Indicator

Monthly Consumer Price Index (YoY)

The Monthly Consumer Price Index (CPI), released by the Australian Bureau of Statistics on a monthly basis, measures the changes in the price of a fixed basket of goods and services acquired by household consumers. The indicator was developed to provide inflation data at a higher frequency than the quarterly CPI. The YoY reading compares prices in the reference month to the same month a year earlier. A high reading is seen as bullish for the Australian Dollar (AUD), while a low reading is seen as bearish.

EUR/USD remains bid near 1.1650 post-US ADP

Finally some respite for the risk complex see EUR/USD partially recover from the recent steep sell-off, this time hovering around the 1.1650 zone amid decent gains in a context of renewed selling pressure on the US Dollar. However, the duration and extension of this bounce should be put to the test amid the unabated tensions in the Middle East.

GBP/USD meets resistance around 1.3400

In line with its risk-linked peers, GBP/USD stages a modest comeback on Wednesday, although meeting some resistance around the 1.3400 neighbourhood. Cable’s humble recovery comes on the back of the fresh downward bias in the Greenback amid a marginal improvement in the global sentiment and steady geopolitical effervescence.

Gold flirts with $5,200 amid safe haven demand

Gold partially fades Tuesday’s sharp pullback, regaining the $5,200 mark per troy ounce on the back of the resurgence of investors’ demand for the safe-haven space. The precious metal remains well propped up by the deterioration of the geopolitical scenario in the Middle East, while the softer tone in the US Dollar collaborates with the uptick.