- AUD/USD remains defiant to broad US dollar strength, Treasury yields rebound.
- US-China optimism and upbeat mood underpin the risk-sensitive aussie.
- All eyes on the US inflation data for the next direction.
AUD/USD is holding the higher ground but remains below the 0.7750 barrier, as markets await the US inflation data release for a fresh trading impetus.
Despite the bounce, the aussie keeps its prison range intact on the 0.7700 level, on track for the second straight weekly gain.
US inflation to hint at Fed’s next move
The bulls stand resilient to a broad-based US dollar strength, underpinned by repositioning ahead of the critical US economic release. The inflation data is eagerly awaited, as investors would gauge the Fed’s next policy move based on the outcome.
Odds for the Fed’s tapering have increased lately after upbeat comments from some of the US policymakers and expectations of strengthening economic recovery. A hotter than expected US CPI print is likely to boost the hopes for withdrawal of the monetary stimulus, in turn, positively impacting the yields alongside the dollar.
On the other hand, the aussie cheers the renewed US-Sino optimism after Global Times reported early Thursday that China and the US Commerce heads have agreed to manage their differences properly and agree to push forward with trade and investment ties.
The aussie optimists also ignored China’s passage of the law to counter foreign sanctions, as the US-Sino trade optimism outweigh. China’s Commerce Ministry lauded the US’ dropping of the WeChat, TikTok ban, as saying the move is “a step in the right direction.
Looking ahead, the pair awaits the US data for a convincing move in prices while following the dollar dynamics and risk trends.