**AUD/USD Steadies as Markets Await US Inflation Data**
*Adapted and expanded from the original article by EconoTimes*
The Australian dollar (AUD) edged higher against the US dollar (USD) during quiet early Asian trading on Monday, as investors exhibited caution ahead of a highly anticipated US inflation release set to influence global currency trends. With subdued volatility and thin participation, the AUD/USD pair hovered near one-month highs, supported by stable commodity prices and some positive sentiment toward risk assets. Market participants remained focused on the upcoming US Consumer Price Index (CPI) data, which could provide fresh cues for the Federal Reserve’s monetary policy outlook and, by extension, shape the trajectory of major currency pairs.
### Overview of Recent AUD/USD Performance
– The AUD/USD pair opened the week with marginal gains, climbing to the 0.6720 region in early trading.
– The pair approached its highest levels in approximately one month, buoyed by improved risk appetite and broadly stable Asian equity indices.
– Commodity prices, notably iron ore and copper, maintained resilient footing, reinforcing support for the Australian currency.
– Despite positive underlying drivers, broader market caution prevailed as traders adopted a wait-and-see approach ahead of crucial US data.
### Key Drivers Behind the Move
#### 1. Market Sentiment and Risk Appetite
– Positive shifts in global equity markets provided a backdrop of stability, with Asian stock indices registering modest rises in early session trade.
– The risk-sensitive Australian dollar often tracks trends in global sentiment, benefiting from periods of optimism.
– Optimism over Chinese economic data and government stimulus efforts have lent support to the AUD in recent weeks.
#### 2. Commodity Prices
– As a leading exporter of commodities such as iron ore, coal, and liquefied natural gas, Australia’s currency is closely linked to the fortunes of raw material prices.
– Iron ore, the country’s premier export, recently regained strength after a period of volatility. This uptick has underpinned the AUD.
– Copper prices have also steadied, reflecting improved prospects for global manufacturing activity and industrial demand.
#### 3. US Dollar Performance
– The US dollar index, which measures the greenback against a basket of major peers, has softened in recent sessions, making room for rival currencies to firm up.
– AUD/USD’s advance coincides with markets scaling back aggressive bets on further Federal Reserve interest rate hikes, following dovish commentary from policymakers and signs of cooling inflation in previous months.
### Eyes on US Inflation Data
The highlight of the trading week is the scheduled US CPI report, which holds significant implications for expectations about the Federal Reserve’s next move.
– Economists polled by Reuters forecast a modest year-on-year increase in headline inflation, with core inflation numbers likely to remain contained.
– A “softer” inflation print could prompt additional US dollar weakness, giving further impetus to AUD/USD bulls.
– Conversely, a “hotter” inflation surprise would reinforce the case for prolonged policy tightening, strengthening the US
Read more on AUD/USD trading.