**AUD/USD Rises in Subdued Trading as Markets Eye Key US Inflation Data**
*Adapted and expanded from the work of EconoTimes staff (original article: “FxWirePro: AUD/USD edges higher in quiet trade ahead of US inflation data” via EconoTimes). Additional information from major financial outlets and currency analysis included.*
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**Overview**
On the day in question, the Australian dollar (AUD) edged higher against the US dollar (USD), making modest gains in generally quiet Asian trading hours. Market participants displayed restrained activity ahead of the highly anticipated release of US inflation data, which has the potential to significantly influence near-term currency movements and broader financial market sentiment.
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**Key Drivers in Focus**
– **Anticipation of US Inflation Data**
– The consumer price index (CPI) report from the United States, scheduled for release later that day, was expected to provide fresh signals on the future path of Federal Reserve monetary policy.
– Traders were cautious, opting to moderate their positions in the hours leading up to the data as volatility risk loomed.
– **Global Economic Sentiment and Risk Appetite**
– General risk sentiment was steady, lending some mild support to the Australian dollar, perceived by many as a proxy for risk appetite in global markets.
– The US dollar index (DXY), which measures the greenback against a basket of major currencies, remained under pressure as investors awaited clarity from inflation figures.
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**Australian Dollar Performance**
– **Day’s Movement**
– The AUD/USD pair rose towards the 0.6700 region during the Asian session.
– This movement represented a recovery from recent lows and extended a mild rebound in the Australian currency.
– **Technical Outlook**
– Technically, the AUD/USD pair maintained key supports, with momentum indicators showing a tentative shift towards bullish conditions in the short term.
– Analysts highlighted that a decisive break above resistance at 0.6720 could pave the way for a further advance towards 0.6750 and possibly 0.6800.
– Immediate support was identified at 0.6660, with additional levels at 0.6620 and 0.6580 on the downside.
– **Factors Specific to the Australian Dollar**
– The Reserve Bank of Australia (RBA) had recently signaled a steady approach to interest rates, stressing a data-dependent stance. Market consensus held that further tightening seemed unlikely in the near term given contained wage pressures and moderating domestic demand.
– Commodities, particularly iron ore and coal, which are significant Australian exports, saw relatively stable prices. This lent some fundamental support to the currency, although ongoing concerns about Chinese demand kept gains in check.
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**US Dollar and Federal Reserve Policy**
– **US Inflation and Rate Expectations**
– The day’s main risk event centered on the release of the latest US CPI. Markets speculated that another set of softer inflation readings could reinforce expectations that the Fed is done
Read more on AUD/USD trading.