- AUD/USD stalls its recovery as the USD regains poise amid cautious markets.
- S&P 500 futures erase Asian gains to now drop 0.25% so far.
- All eyes on Wednesday’s Australian inflation data for fresh hints on RBA.
AUD/USD is trading around 0.7200, having stalled its Asian recovery momentum heading into the European open.
The latest leg down in the aussie came on the back of resurgent US dollar demand, as the markets turn cautious, reflective of the 0.25% drop in the S&P 500 futures, which were up modestly during the Asian trading.
Reports of stringent lockdown measures in the Chinese capital of Beijing due to the rapid rise of coronavirus cases. Meanwhile, death in Shanghai city rise, threatening the reopening optimism. Chinese covid lockdowns-driven supply chain and growth concerns weigh on the market sentiment, reviving the dollar’s safe-haven demand.
Additionally, global growth concerns also remain ignited amidst the aggressive Fed tightening expectations, keeping the sentiment around the greenback underpinned. Investors also prefer to hold the US currency ahead of the Durable Good and CB Consumer Confidence data.
Meanwhile, Wednesday’s Australian quarterly inflation release keeps aussie bulls restricted. “The annual rate is expected to have reached 4.6% in the first quarter of the year, up from 3.5% in Q4 2021. The RBA's Trimmed Mean core CPI is foreseen at 3.4%, much higher than the previous 2.6% and above the upper end of the Reserve Bank of Australia’s target for the first time in over a decade,” FXStreet’s Chief Analyst Valeria Bednarik noted. The inflation data will be key for the RBA’s next policy action.