AUD/USD bears flirt with weekly low near 0.7350 on mixed China CPI, PPI outcome
- AUD/USD remains pressured for the fourth day after China monthly inflation.
- China CPI eased below forecast and prior, PPI crossed the marks in August.
- Risk-off mood takes clues from covid updates, tapering chatters and pre-ECB caution.
- US weekly jobs data, Fedspeak also become importance but nothing more than ECB.
AUD/USD remains depressed for the fourth consecutive day, down 0.13% intraday near the weekly low after China released headline inflation data for August on early Thursday. Also weighing on the quote are the risk-off mood and the pre-ECB caution.
China Consumer Price Index (CPI) dropped below 1.0% forecast and prior to 0.8% YoY, also declining below 0.5% market consensus on MoM to 0.1%, whereas the Producer Price Index (PPI) crossed 9.0% expected figures with 9.5% level. Given the mixed inflation data from the key customer, AUD/USD keeps the weekly south-run following the data release.
Read: China CPI below expectations & PPI above, mixed outcome, AUD steady
In addition to the data, sour sentiment also weighs on the AUD/USD prices due to the pair’s risk barometer status.
Among the negatives for the risk appetite, Fed tapering chatters and economic fears due to the recent rise in the coronavirus numbers take the first line. While a jump in the US JOLTS Job Openings to refresh record top helped the Fed policymakers to reiterate their bullish bias, rise in the virus infections challenge the optimists.
St. Louis Fed Bank President James Bullard and New York Fed Bank President John Williams backed tapering in 2021 whereas Dallas Federal Reserve Bank President Robert Kaplan makes the case for an October taper despite cutting on Q3 GDP due to covid. It’s worth observing that Australia reports the second day of increase in covid cases whereas China also marked an uptick in the COVID-19 numbers.
It should be noted that the doubts over US President Joe Biden’s six-pronged strategy, up for publishing on Thursday, joins the US Diplomat’s mixed view on Jerome Powell’s reappointment as the Fed Chairman to weigh on the sentiment. Additionally, signals from Republicans and some of the Democratic Party members to offer a bumpy road to the US stimulus also spoiled the mood.
Against this backdrop, S&P 500 Futures drop 0.17% intraday while the US 10-year Treasury yields remain directionless and so do the US Dollar Index (DXY).
Moving on, market players are likely to remain cautious, mostly keeping the latest risk-aversion wave, ahead of the key European Central Bank (ECB) monetary policy meeting. Also important will be the weekly US job numbers and headlines concerning the coronavirus as well as the US stimulus.
Technical analysis
AUD/USD drops back below 50-DMA level of 0.7365, after a brief upside break amid the last week that couldn’t cross a descending trend line resistance line from early May. The pullback move also gained acceptance on breaking a three-week-old support line. Hence, prices are likely to remain pressured towards the July month’s low near 0.7288. However, the 0.7300 threshold may offer an intermediate halt during the fall.