AUD/USD ticks down to near 0.6700 ahead of US inflation data

AUD/USD edges down to near 0.6700 in the countdown to the US CPI data for December.
The US headline inflation is estimated to have grown steadily at an annualized pace of 2.7%.
This week, the major trigger for antipodeans will be China’s Trade Balance data.

Sagar Dua FXStreet

The AUD/USD pair trades marginally lower to near 0.6700 during the European trading session on Tuesday. The Aussie pair edges down as the US Dollar (USD) ticks higher slightly ahead of the United States (US) Consumer Price Index (CPI) data for December, which will be published at 13:30 GMT.

During the press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, edges up to near 99.00. The DXY corrected sharply on Monday from its monthly high of 99.26 after Federal Reserve (Fed) Chair Jerome Powell was charged with criminal charges over mismanaging funds allocated to the renovation of Washington’s headquarters.

As measured by the CPI, the US headline inflation is expected to have grown steadily by 2.7% Year-on-year (YoY). In the same period, the core inflation – which excludes volatile food and energy items – is seen accelerating to 2.7% from the prior reading of 2.6%. On a monthly basis, both the headline and the core CPI rose by 0.3%.

Signs of price pressures cooling down are expected to boost dovish speculation for the Fed’s monetary conditions in the near term. However, hot figures are unlikely to weigh on them significantly as officials have been more concerned about weak job market conditions.

Meanwhile, the Australian Dollar (AUD) trades broadly calm during European trading hours. Going forward, the major trigger for the Aussie dollar will be China’s Trade Balance data for December, which will be published on Wednesday. The data is expected to show that Imports by Beijing grew at a moderate pace of 0.9% against November’s reading of 1.9%. The impact of China’s international trade data remains significant for the Australian Dollar, given that the Australian economy relies heavily on its exports to Beijing.

Economic Indicator

Consumer Price Index (YoY)

Inflationary or deflationary tendencies are measured by periodically summing the prices of a basket of representative goods and services and presenting the data as The Consumer Price Index (CPI). CPI data is compiled on a monthly basis and released by the US Department of Labor Statistics. The YoY reading compares the prices of goods in the reference month to the same month a year earlier.The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.

Why it matters to traders?

The US Federal Reserve (Fed) has a dual mandate of maintaining price stability and maximum employment. According to such mandate, inflation should be at around 2% YoY and has become the weakest pillar of the central bank’s directive ever since the world suffered a pandemic, which extends to these days. Price pressures keep rising amid supply-chain issues and bottlenecks, with the Consumer Price Index (CPI) hanging at multi-decade highs. The Fed has already taken measures to tame inflation and is expected to maintain an aggressive stance in the foreseeable future.

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

EUR/USD climbs to daily highs near 1.1820

EUR/USD now picks up pace and advances to the area of daily peaks north of the 1.1800 barrier at the end of the week. The pair’s decent move higher comes against the backdrop of a generalised lack of direction in the FX galaxy and the mild offered stance in the US Dollar.

GBP/USD trims losses, retests 1.3460

After briefly challenging its key 200-day SMA near 1.3440, GBP/USD now manages to regain some balance and revisit the 1.3460 zone on Friday. Cable’s pullback comes as the selling pressure on the Greenback gathers traction, reigniting some recovery in the risk-linked space.

Gold flirts with four-week highs past $5,200

Gold extends its rebound, climbing for a third consecutive session and pushing back above the $5,200 mark per troy ounce on Friday. The move higher continues to draw support from lingering geopolitical tensions and the ongoing uncertainty surrounding US trade policy, both of which are keeping safe-haven demand firmly in play.

Bitcoin, Ethereum and Ripple consolidate with short-term cautious bullish bias

Bitcoin, Ethereum and Ripple are consolidating near key technical areas on Friday, showing mild signs of stabilization after recent volatility. BTC holds above $67,000 despite mild losses so far this week, while ETH hovers around $2,000 after a rejection near its upper consolidation boundary.

Changing the game: International implications of recent tariff developments

The Supreme Court ruling on International Emergency Economic Powers Act (IEEPA) tariffs provides limited relief for the rest of the world, with weighted average tariff rates modestly lower.

Starknet unveils strkBTC, shielded Bitcoin transactions on Ethereum Layer 2

Starknet, the Ethereum Layer 2 network developed by StarkWare, today announced strkBTC, a wrapped Bitcoin asset that introduces optional shielding while preserving full DeFi composability.