AUD/USD portrays market’s anxiety ahead of US inflation below 0.7200
- AUD/USD struggles to extend three-day uptrend, as well as upside break of 50-DMA.
- Cautious sentiment ahead of US CPI challenge risk barometer pair.
- Australia Consumer Inflation Expectations rose for February, Aussie Senior Finance Executives expect RBA rate hike in 2022.
- White House comments, Fedspeak magnify inflation fears ahead of the key US January CPI release.
AUD/USD struggles for a clear direction around the three-week top, taking rounds to 0.7180 during Thursday’s Asian session.
The risk barometer pair refreshed a multi-day peak the previous day during a three-day uptrend as US dollar and Treasury yields eased ahead of crucial Consumer Price Index (CPI) data. However, pre-CPI caution supersedes upbeat Aussie data and expectations of RBA rate hikes to challenge the pair’s recent moves.
Australia’s Consumer Inflation Expectations for February rose past 4.5% forecasts and 4.4% prior readings to 4.6%. Also bullish for the AUD/USD pair is Deloitte’s latest bi-annual survey of Australia’s headline Chief Financial Officers (CFOs). “Around three-quarters of Australia’s senior finance executives expect an interest rate rise this year as the economy bounces back from the pandemic,” said the survey per Australian Associated Press (AAP).
Elsewhere, the White House (WH) conveyed expectations of a higher YoY inflation figure while also saying, “Its irrelevant month on month number will continue trending lower the rest of the year.” Following that, WH Economic Adviser Brian Deese said that he sees reason to think that factors boosting inflation will moderate over time.
Further, Cleveland Fed President Loretta Mester supported the March rate hike while Atlanta Federal Reserve President Raphael Bostic told CNBC on Wednesday he is hopeful that they will start to see a decline in inflation. Fed’s Bostic also said, "Leaning toward the need for a fourth interest rate increase in 2022."
It should be observed that recent escalation in the US-China trade tussles and fears over Russia’s invasion of Ukraine seems to take a back seat for now.
That said, the US 10-year Treasury yields pause the previous day’s pullback from the highest levels since July 2019 while the S&P 500 Futures remain indecisive despite Wall Street’s upbeat performance on tech-rally and strong earnings.
Moving on, AUD/USD prices can witness further headwinds ahead of the US CPI data for January, due to the pair’s risk barometer status. Any disappointment from the key figures, expected 7.3% YoY versus 7.0% prior, will be important to watch.
Technical analysis
Although a successful break of the 50-DMA, near 0.7165 by the press time, keeps AUD/USD buyers hopeful, a descending resistance line from late October 2021, around 0.7210, challenges the quote’s short-term recovery. It’s worth noting that a two-week-old support line near 0.7120 adds to the downside filters.